Purpose: 1A

It is simply good business to continually know the cash value (corporate valuation) of your company. This exercise gives you practice in determining the total worth of a company using several methods. To perform this analysis, use McDonald’s financial statements as given in the Cohesion Case.

Instructions:

· Step 1: Calculate the financial worth of McDonald’s based on four approaches:

· (1) the net worth method,

· (2) the net income method,

· (3) the price-earnings ration method, and

· (4) the outstanding shares method.

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· Step 2: Get an average of the four methods. In a dollar amount, how much is McDonald’s worth?

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· Step 3: Compare your analyses and conclusions with the class in the Discussion.