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mcdonalds and burger king financials
Term Paper ID:43529
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Essay Subject:
mcdonalds and burger king financials... More...
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1 Pages / 225 Words
2 sources, 0 Citations,
APA Format
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Paper Introduction:
Fast Food Corporations Analyses Under its Assets for McDonald\'s has Cash Receivablesoutstanding inventory and prepaid expenses which are considered assetsbecause they entitle the organization to a benefit in the future be itprepaid insurance or prepaid advertising Cash receivables inventory and prepaid expenses are considered current assets because they are mosteasily convertible into cash If a customer fails to pay off his accountreceivable McDonald\'s may have to debit their Bad Debt expense account and correspondingly bring down the credit in Accounts receivable Property
Text of the Paper:
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McDonald'sdoes not report intangibles on its balance sheet. Fast Food Corporations Analyses Under its Assets for 2 8, McDonald's has Cash, Receivablesoutstanding, inventory, and prepaid expenses, which are considered assetsbecause they entitle the organization to a benefit in the future, be itprepaid insurance or prepaid advertising. Interestingly, Burger King does notcount inventory among its current assets. If a customer fails to pay off his accountreceivable, McDonald's may have to debit their Bad Debt expense account,and correspondingly bring down the credit in Accounts receivable. McDonald's, the world's mostpopular fast food chain, has a unique position in the market and claims$2.237 billion dollars in goodwill assets, but goodwill is always asubjective measure. However, Burger King does have asizable entry for intangible assets, which may be food patents, technicalprocess patents, trademarks, or other intellectual properties. SinceBurger King does not operate on the same scale that McDonald's does, andtherefore operates much less property, plant, and equipment, could expectBurger King's depreciation to have a less significant impact on the bottomline. Property,Plant and Equipment are assets because they are "real property," and theirbook values must be depreciated each year by straight-line, double-declining, or by sum-of-the-years-digits. In the event that a number of people eat Big Macs anddie, McDonald's may be forced to take a huge credit from its goodwillaccount and apply a debit to retained earnings for this amount. Cash, receivables, inventory,and prepaid expenses are considered current assets because they are mosteasily convertible into cash. In 2 8, McDonald'srestructured its massive LT debt used to finance its worldwide operations.Contrastingly, Burger King (who operates much fewer stores), was notencumbered by such massive LT debt.
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