What information is provided in McDonald’s basic financial statements?

McDonald’s Corporation (NYSE: MCD) is a publicly held corporation with more than $31 billion in assets. It started in 1940 as a BBQ restaurant in San Bernardino, California. In 1948, McDonald’s switched to burgers, shakes, potato chips, and pie. Its Golden Arches are generally believed to be the most recognized symbol in the world.

To follow are McDonald’s four basic financial statements for its most recent year, the year ending December 31, 2016.  Please note that all statements have been adapted and condensed for educational use and should not be used for investment decisions.

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  McDonald’s complete, unabridged financial statements can be found on its investor relations website.

Note: The financial statements above can also be downloaded in Excel format for enhanced readability.

Questions

1. What form of business organization is McDonald’s? How do you know?
2. Identify the line item that flows from the income statement to the statement of retained earnings.
3. Identify the line item that flows from the statement of retained earnings to the balance sheet.
4. Identify the line item that flows from the balance sheet to the statement of cash flows.
5. Did McDonald’s have net income or net loss for 2016? Over what period of time was this amount earned?
6. Write the accounting equation for McDonald’s as of December 31, 2016.

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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