question archive Calculate ROI for geographic segments; analyze results—McDonald’s Corp

Calculate ROI for geographic segments; analyze results—McDonald’s Corp

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Calculate ROI for geographic segments; analyze results—McDonald’s Corp. McDonald’s conducts operations worldwide and is managed in two primary geographic segments: U.S., and International Operated Markets, which is comprised of Australia, Canada, France, Germany, Italy, the Netherlands, Russia, Spain, and the U.K. A hybrid geographic/corporate segment, International Developmental Licensed Markets & Corporate, reports on the results of all other countries as well as any unallocated amounts. McDonald’s allocates resources to, and evaluates the performance of, its segments based on operating income. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory, certain fixed assets, and certain other assets. Corporate assets include corporate cash and cash equivalents, asset portions of financial instruments, and home office facilities. Refer to the following geographic segment data (in millions) from the 2020 annual report of McDonald’s Corp.:




Based on a cursory review of the data, can you identify any significant trends in the consolidated totals? Are there any notable trends in the data for specific business segments?


Using the DuPont model to show margin and turnover, calculate ROI for each of the two primary geographic segments for 2020. Round your percentage answers to one decimal place.


Looking only at the data presented here, which business segment appears to offer McDonald’s Corp. the greatest potential for high returns in the future?


Comment about the difficulties you may encounter when attempting to interpret the International Developmental Licensed Markets & Corporate segment results.


Can you think of any ways in which McDonald’s could improve upon its classification of geographic segment data?



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