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QUESTION 15 For the following question, please refer to the attached spreadsheet. This sheet contains income statements and b
Lell Styles Clipboard Font Styles 111 X for McDonalds Corporation 2016 Annual Report Consolidated Statement of Income Years
CU yles Clipboard Font Styles 58.90 $ 1.223.40 $ 7,685.50 1.474 101 298.70 100.10 56520 558.70 1,527 00 4848 60 9643 00 725 9
134 O CDE Yum! Brands Consolidated and Combined Statements of Income (Loss) - USD ($) Sin Millions 12 Months Ended Dec 31, De
S 0.89 $10.02) Basic Earnings (Loss) Per Common Share Diluted Earnings (Loss) Per Common Share $0.89 (0.02) Consolidated and
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Answer #1

In order to compare the Financial Return of the two companies, we shall be using Return on Equity (ROE) formula i.e.

Net Income / Average Shareholders Equity

Assumptions:

Net Income here shall be without giving effect to Non-controlling interest

Shareholders Equity shall exclude Common Stock in Treasury and Non-controlling interest equity

Mc Donalds:

Net Income for 2016: 4686.5

Shareholders Equity for 2016 : 16.6+6757.9+46222.7-3092.9-2204.3 = 47,700

Shareholders Equity for 2015 : 16.6+6533.4+44594.5-2879.8+7087.9 = 55,352.6

Average Shareholders Equity : (47700+ 55352.6)/2 = 51526.3  

ROE : 4686.5/51526.3 = 9%

Yumm:

Net Income for 2016: 502

Shareholders Equity for 2016 : 4+2352+40-1 = 2395

Shareholders Equity for 2015 : 1791 + 130 = 1921

Average Shareholders Equity : (2395+1921)/2 = 2158

ROE : 502/2158= 9%

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