MCDONALD’S CORPORATION

(MCD)

ACCOUNTING INFORMATION SYSTEM

GROUP 3/ 2 BSA 2

MEMBERS:

BEA, EUNICE ANN M.

BERNAL, EUNICE MAYBELLE B.

ESPINA, MARK JEOFFREY

FELIN, ROSEMIN C.

GUTIERREZ, FRANCHESCSA JILLIAN

KRIZZALYN LOPEZ

MERANO, HANNAH MAE B.

MONTERDE, ANN SHIRLY

PASIA, CRISOL

PARDUCHO, JANNAH MAREE

SUBMITTED TO:

DEAN FILIPINA MANUEL

INTRODUCTION

McDonald's Corporation (McDonald's) operates and franchises McDonald's restaurants. The Company's
restaurants serve a locally relevant menu of food and drinks sold at various price points in over 100
countries. The Company's segments include U.S., International Lead Markets, High Growth Markets, and
Foundational Markets and Corporate. The U.S. segment focuses on offering a platform for authentic
ingredients that allows customers to customize their sandwiches. Its High Growth Markets segment
includes its operations in markets, such as China, Italy, Korea, Poland, Russia, Spain, Switzerland, the
Netherlands and related markets. The International Lead markets segment includes the Company's
operations in various markets, such as Australia, Canada, France, Germany, the United Kingdom and
related markets. The Foundational markets and Corporate segment is engaged in operating restaurants
and increasing convenience to customers, including through drive-thru and delivery.

BACKGROUND

McDonald’s, in full McDonald’s Corporation, American fast-food chain that is one of the largest in the
world, known for its hamburgers. Its headquarters are in Oak Brook, Illinois. The first McDonald’s
restaurant was started in 1948 by brothers Maurice (“Mac”) and Richard McDonald in San Bernardino,
California. They bought appliances for their small hamburger restaurant from salesman Ray Kroc, who
was intrigued by their need for eight malt and shake mixers. The McDonald brothers insisted that their
architect design an attention catching building that would highlight their Speedee Service System.
Architect Stanley Meson design of the “Red and White” did not disappoint. Feeling that the roof line was
a bit too flat Dick McDonald added arches to the building. A sign maker incorporated yellow neon into
them creating the “Golden Arches”. The oldest McDonald’s Red and White (opened in 1953) still
operating today is in Downey, California.

Seeing great promise in their restaurant concept, Kroc offered to begin a franchise program for the
McDonald brothers. On April 15, 1955, he opened the first McDonald’s franchise in Des Plaines, Illinois,
and in the same year launched the McDonald’s Corporation, eventually buying out the McDonald
brothers in 1961. The number of McDonald’s outlets would top 1,000 before the end of the decade.
Boosted by steady growth, the company’s stock began trading publicly in 1965.

The public face of McDonald’s was created in 1963 with the introduction of a clown named Ronald
McDonald, while the double-arch “m” symbol became McDonald’s most enduring logo in 1962, lasting
far longer than the tall yellow arches that had once dominated the earlier restaurant rooftops. The chain
continued to expand domestically and internationally, extending to Canada in 1967, reaching a total of
10,000 restaurants by 1988, and operating more than 35,000 outlets in more than 100 countries in the
early 21st century. Growth was so swift in the 1990s that it was said a new McDonald’s opened
somewhere in the world every five hours. It effectively became the most popular family restaurant,
emphasizing affordable food, fun, and flavours that appealed to children and adults alike.
McDonalds Process Flow Chart

McDonald’s Customer Oder Process Flow Chart

McDonald’s Drive Through Ordering Process

Cash Purchase and Cash Disbursements

The cash flow statement provides information about a company’s cash receipts and cash payments
during an accounting period, showing how these cash flows link the ending cash balance to the
beginning balance shown on the company’s balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities,
cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing
activities.

McDonald’s Corp., consolidated cash flow statement(US$ in thousands)

McDonald’s Corp., consolidated Cash Flow Statement: Selected Items
Cash Flow Statement Item
Cash provided by operations
Cash (used for) provided by
investing activities
Cash provided by (used for)
financing activities
Description The Company
Amount of cash inflow (outflow) McDonald’s Corp.’s cash
from operating activities, provided by operations
excluding discontinued increased from 2017 to 2018
operations. Operating activity and from 2018 to 2019.
cash flows include transactions,
adjustments, and changes in
value not defined as investing
or financing activities.
Amount of cash inflow (outflow) McDonald’s Corp.’s cash (used
of investing activities, excluding for) provided by investing
discontinued operations. activities decreased from 2017
Investing activity cash flows to 2018 and from 2018 to 2019.
include making and collecting
loans and acquiring and
disposing of debt or equity
instruments and property,
plant, and equipment and other
productive assets.
Amount of cash inflow (outflow) McDonald’s Corp.’s cash
of financing activities, excluding provided by (used for) financing
discontinued operations. activities decreased from 2017
Financing activity cash flows to 2018 but then increased from
include obtaining resources 2018 to 2019 exceeding 2017
 from owners and providing level.
them with a return on, and a
return of, their investment;
borrowing money and repaying
amounts borrowed, or settling
the obligation; and obtaining
and paying for other resources
obtained from creditors on
long-term credit.

McDonald's Cash Conversion Cycle Calculation

Cash Conversion Cycle (CCC) measures how fast a company can convert cash on hand into even more
cash on hand. This metric looks at the amount of time needed to sell inventory, the amount of time
needed to collect receivables and the length of time the company is afforded to pay its bills without
incurring penalties.

Cash Conversion Cycle is one of several measures of management effectiveness.

McDonald's Days Sales Outstanding for the three months ended in Dec. 2019 was 37.94. McDonald's
Days Inventory for the three months ended in Dec. 2019 was 1.69. McDonald's Days Payable for the
three months ended in Dec. 2019 was 36.03. Therefore, McDonald's Cash Conversion Cycle (CCC) for
the three months ended in Dec. 2019 was 3.60.

McDonald's's Cash Conversion Cycle for the fiscal year that ended in Dec. 2019 is calculated as

Cash Conversion Cycle = Days Sales Outstanding + Days Inventory - Days Payable

= 38.52 + 1.86 - 36.21

= 4.17

McDonald's's Cash Conversion Cycle for the quarter that ended in Dec. 2019 is calculated as:

Cash Conversion Cycle = Days Sales Outstanding + Days Inventory - Days Payable

= 37.94 + 1.69 - 36.03

= 3.60

* All numbers are in millions except for per share data and ratio. All numbers are in their local
exchange's currency.
Generally, the lower this number is, the better for the company. Although it should be combined with
other metrics (such as ROE % and ROA %), it can be especially useful for comparing close competitors,
because the company with the lowest CCC is often the one with better management.

The following section summarizes insights on McDonald's Corporation's Cash Conversion Cycle:

Performance Summary
 McDonald's latest twelve months cash conversion cycle is 3 days.
 McDonald's cash conversion cycle for fiscal years ending December 2015 to 2019 averaged 2
days.
 McDonald's operated at median cash conversion cycle of 2 days from fiscal years ending
December 2015 to 2019.
 Looking back at the last five years, McDonald's cash conversion cycle peaked in December 2017
at 4 days.
 McDonald's cash conversion cycle hit its five-year low in December 2015 of 0 days.
 McDonald's cash conversion cycle decreased in 2018 (2 days, -45.5%) and 2019 (2 days, -11.8%)
and increased in 2015 (0 days, -115.4%), 2016 (2 days, +709.2%) and 2017 (4 days, +118.9%).

Payroll Progress
McDonald's Corporation pays its employees an average of $58,019 a year. Salaries at McDonald's
Corporation range from an average of $32,257 to $109,947 a year. McDonald's Corporation employees
with the job title Marketing Director make the most with an average annual salary of $107,462, while
employees with the title Restaurant Assistant Manager make the least with an average annual salary of
$35,282.

What payroll system is McDonald's currently using?

McDonald's does not disclose information that is commercially sensitive as this would offer an
advantage to our competitors.
“McDonald’s franchisees are responsible for, and make their own decisions around, employment and
pay related matters."