Global Environment and Problem Sets Essay

Words: 2139
Pages: 9

Team B
Learning Team Global Environments and Problem Sets
ACC 300

Learning Team Global Environments and Problem Sets
In the restaurant business there is a household name that controls a big part of the market share and has experienced a tremendous growth since it was founded in the 1940’s. McDonald’s growth has not just been in the United States but has grown rapidly grown in the global market. McDonald’s has adapted their business model to global environments by maintaining consistent accounting standards. Reporting debt securities, common stock, equity, and any financial activities on financial statements is a common practice by the McDonald’s corporation which has assisted them to plan
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The Company has paid dividends on common stock for 35 consecutive years through 2010 and has increased the dividend amount at least once every year. As in the past, future dividend amounts will be considered after reviewing profitability expectations and financing needs, and will be declared at the discretion of the Company’s Board of Directors” (MacDonald, 2012)
As we have previously mentioned, equity and debt securities are financial instruments that assist companies to raise cash and finance their operations. One on hand, debt securities are legal obligations to repay borrowed funds at a specified maturity date and provide interim interest payments as specified in the agreements such as commercial papers, bonds, loans, debentures, and Treasury bills among others. The benefits for companies of issuing debt securities are that the interests paid are tax-deductible, indeed they are expensed hence the company pays less tax. Also, issuing debts protect companies from losing control over operations since no equity has been handed. On the other hand, debt securities increase the probability of bankruptcy and expected bankruptcy costs; indeed, it reduces the financial flexibilities due to negative covenants for example.
While, equity securities represent an ownership and stake in a company, such as common and preferred shares. Shareholders are entitled to dividends from post-tax earnings, which are taxed at a lower rate than interest payments