Marketing

Joslyn Roth

McDonalds Case

1. Based on ratio analysis (p. 236-239), which financial ratios may be calculated given the information in the case? Please show all calculations in order to get full credit...need financial ratios for all years (1997 through 2001) so that you may make a comparison.

With the information given in the case, we can calculate total asset utilization, profit margin on sales, and return on total assets. We do not have current assets, current liabilities, or inventory so the other ratios are not able to be calculated.

Total Asset Utilization=Sales/Total Assets

TAU(1997)=$33,638/$18,242= 1.8439

TAU(1998)=$35,979/$19,784= 1.8186

TAU(1999)=$38,491/$20,983= 1.8344

TAU(2000)=$40,181/$21,684= 1.8530

TAU(2001)=$40,630/$22,535= 1.8029

Profit Margin on Sales=Profit before tax/Sales

PM(1997)=$2,407/$33,638= 0.0715= 7.15%

PM(1998)=$2,307/$35,979=0.0641= 6.41%

PM(1999)=$2,884/$38,491=0.0749= 7.49%

PM(2000)=$2,882/$40,181=0.0717= 7.17%

PM(2001)=$2,330/$40,630= 0.0573= 5.73%

Return on Total Assets=Profit before tax/Total Assets

ROTA(1997)=$2,407/$18,242= 0.1319= 13.19%

ROTA(1998)=$2,307/$19,784=0.1166= 11.66%

ROTA(1999)=$2,884/$20,983=0.1374= 13.74%

ROTA(2000)=$2,882/$21,684=0.1329= 13.29%

ROTA(2001)=$2,330/$22,535= 0.1034= 10.34%

2. Based on the segmentation literature presented in chapter 5 of your textbook, how should McDonald segment its market? Discuss. (One paragraph). Please use segmentation terminology from Ch 5 as well as case material.

In order for McDonald’s to properly decide how to segment its market, they should conduct a market segmentation analysis. McDonald’s should first delineate the firm’s current situation and determine objectives, opportunities, and restrictions. Based on the case and the ratios calculated, the sales and earnings have declined in recent years. McDonald’s now needs to determine consumer needs and wants, so they can find appropriate strategies to stay ahead of the competition. Many young people are...