Suppose in its 2017 annual report that McDonald’s Corporation reports beginning
ID: 2568692 • Letter: S
Question
Suppose in its 2017 annual report that McDonald’s Corporation reports beginning total assets of $29.70 billion, ending total assets of $31.40 billion, net sales of $22.95 billion, and net income of $4.85 billion. (a) Compute McDonald’s return on assets. (Round return on assets to 2 decimal places, e.g. 5.12%.) McDonald’s return on assets Enter McDonald’s return on assets in percentages rounded to 2 decimal places % (b) Compute McDonald’s asset turnover. (Round asset turnover to 2 decimal places, e.g. 5.12.) McDonald’s asset turnover Enter McDonald's asset turnover rounded to 2 decimal places times
Explanation / Answer
(a) Compute McDonald’s return on assets.
Average Total assets = (29.70+31.40)/2 = 30.55 billion
Return on assets = Net income*100/Average operating assets
= 4.85*100/30.55
Return on assets = 15.88%
b) Compute McDonald’s asset turnover.
Assets turnover = Net sales/Average total assets
= 22.95/30.55
Assets turnover = 0.75 times