Mcdonalds_Accounting_Assets

McDonald’s total assets as of December 31, 2011 are $ 32,989,900. This can be compared to their 2010 total assets which were $31,975,200. The total assets are everything that a business owns. Assets are items in an organization that can be physically converted into cash. The process of assessing how easily an asset can be turned into money is how liquidity is measured. For McDonalds these assets include items such as cash, accounts receivable, investments, and property and equipment. These items are listed on the balance sheet based on their level of liquidity, which means the speed in which the items can be exchanged for cash. The assets that are the most liquid are found at the top of a financial statement. One example of this type of asset is accounts receivable which represents how much money is owed to McDonalds in the amount of $1,334,700. After the most liquid investments are identified and listed McDonalds then provides its current assets, such as inventory, on their financial statement. Items in this section are expected to be sold to create income within a 12-month period. In the case of our company there is $ 116,800,000 in inventories waiting to generate income. The next groups of assets are long-term assets and consist of items that would take the longest to convert into cash. An example of this is McDonalds ‘property and equipment, which is listed at $35,737,600. Assets are important to an Organization like McDonalds because the information can be used internally by managers or others to help plan, organize and run business operations (Kimmel, Weygandt, & Kieso,  2009). The information can also be used by people outside the company such as investors or stockholders to determine how liquid a company is and therefore make important decisions about whether to buy, hold, or sell stock. Creditors also find this information useful because it aids in the decision of determining the risk of granting credit or loan money. Other important groups also use this information and can include labor unions, taxing authorities, customers, and regulatory agencies (Kimmel, Weygandt, & Kieso,  2009). Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Financial Accounting: Tools for Business Decision Making (5th ed.). Danvers, MA: John Wiley and Sons, Inc..