Financial statements analysis and common stock valuation

Present Value of Free Cash Flow to the Firm (FCFF)

The FCFF valuation approach estimates the value of the firm as the present value of future FCFF discounted at the weighted average cost of capital (WACC).

• Intrinsic Stock Value (Valuation Summary)
• Weighted Average Cost of Capital (WACC)
• FCFF Growth Rate (g)

Price to Earnings (P/E)
since 2005

The P/E ratio tells analyst how much an investor in McDonald’s Corp.’s common stock pays per dollar of current earnings.

• Calculation
• Comparison to Competitors
• Comparison to Travel & Leisure Sector
• Comparison to Consumer Services Industry

Dividend Discount Model (DDM)

The dividend discount model (DDM) is a technique for estimating the value of a share of McDonald’s Corp.’s common stock issue as the present value of all future dividends.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• Dividend Growth Rate (g)

Analysis of Liquidity Ratios
Quarterly Data

Measures the adequacy of a McDonald’s Corp.’s cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
Quarterly Data

Liabilities and stockholders’ equity components shown as percentage of total liabilities and stockholders’ equity.

Selected Financial Data
since 2005

Main items of McDonald’s Corp.’s financial statements.

• Income Statement
• Assets
• Liabilities and Stockholders’ Equity
• Cash Flow Statement
• Per Share Data