Question

Suppose McDonald’s 2022 financial statements contain the following selected data (in millions). Current assets $3,446.0 Interest...

Suppose McDonald’s 2022 financial statements contain the following selected data (in millions). Current assets $3,446.0 Interest expense $479.0 Total assets 30,254.0 Income taxes 1,942.0 Current liabilities 3,013.0 Net income 4,557.0 Total liabilities 16,221.0 (a1) Compute the following values.

a. Working capital. (Round to 1 decimal place, e.g. 5,275.5) $enter a dollar amount in millions millions

b. Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) enter current ratio rounded to 2 decimal places :1

c. Debt to assets ratio. (Round to 0 decimal places, e.g. 62%.) enter percentages rounded to 0 decimal places %

d. Times interest earned. (Round to 2 decimal places, e.g. 6.25.) enter times interest earned rounded to 2 decimal places times

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Answer #1

a) Working Capital = current assets - current liabilities

Given Current assets $3,446.0

Current liabilities $3,013.0

Working Capital = $3,446.0 - $3,013.0

= $433.0

b) Current ratio = current assets / current liabilities

= $3,446.0 / $3,013.0

= 1.14:1

c) Debt to assets ratio = Total liabilities / Total assets

Given Total liabilities = $16,221.0

Total assets = $30,254.0

Debt to assets ratio = $16,221.0 / $30,254.0

= 54%

d) Times interest earned = (Net income + taxes) / Interest expense

Given Interest expense $479.0

Income taxes $1,942.0

Net income $4,557.0

Times interest earned = ($4,557.0 + $1,942.0) / $479.0

= $6,499.0 / $479.0

= 13.68

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