Mcdonald

Assignment 5: Select a specific company that ranks between 100 and 120 on the 2012 Fortune list. Identify the company. Establish a specific value for this company so that another organization might be able to acquire it. How much is it worth in dollars? Apply principles from the course in establishing the value.

 

 

1)      you need to select a company/corporation ranking between 100 - 120.

I would like to choose McDonald.

2)      you have to define the value of the company that includes capital, asset, goodwill, stockholders' equity

In term of common-size analysis, McDonald has about 70% assets of plant comparing YUM (45%). If I didn’t use common-size analysis, I couldn’t figure it out because “lease”, “mortgage payable” and “bond” are usually categorized in Long-term debt. Or in this case, McDonald might use cash as rent. However, McDonald is actually doing real estate investment and they use mortgage. But the number of long-term debt is almost the same as YUM, we can’t compare. I can say same thing about “intangible asset” because goodwill is often Off-balance sheet. Market Capitalization of Macdonald is top of restaurant business and the following is Starbucks. It means the amount of stocks and the price is stable and profitable. 

 

3)      you will determine the value of company and worth of dollars based on the acquisition.

 

Actually it’s difficult to acquire McDonald. When we intend to conduct M&A, we would see future cash flow and synergy effect. We don’t know how we are going to use such a huge plant to enhance their business and the business is still stable. In addition, their trustable goodwill would be less important factor because in case of Time warner cable, their goodwill is 44% (common-size) and it will strongly affects M&A.