Problem: McDonalds 2004 financial statements contain the following selected data (in millions)
Current Assets $2,857.8
Total Assets 27,837.5
Current Liabilities 3,520.5
Total Liabilities 13,636
Interest exp. $358.4
Income taxes 923.9
Net income 2,278.5
a) Compute the following values and provide a brief interpretation of each:
1) Working Capital
2) Current Ratio
3) Debt to total assets ratio
4) Times interest earned ratio.
b) The notes McDonalds financial statements show that subsequent to 2004 the company will have future minimum lease payments under operating leases of $11,442.6 million. If these assets have been purchased with debt, assets and liabilities would rise by approximately $10,500 million. Recompute the debt to total assets ratio after adjusting for this. Discuss your results.