foreign markets. "Of the $199 million of restricting costs incurred in the six months ended June
30, 2023, $62 million was recorded in the U.S., $72 million was recorded in the International
Operated Markets segment and $65 million was recorded in the International Development
Licensed Markets & Corporate segment, the majority of which was recorded at Corporate"
McDonald's 8.2.23 Quarterly Report
, 2023). With so many costs and investments, it would be
beneficial to research the markets the business is expanded into.
Credit risk is "the risk of loss as a result of default on a financial obligation" (Titman et
al., 2017) which is also known as default risk. In other words, a loss occurs when the borrower
fails to pay back the loan." At June 30, 2023, the Company was required to post $99 million of
collateral due to the negative fair value of certain derivative positions" (
, 2023). To avoid future instances such as this one, McDonald's would need to
assess and research its suppliers' and distributors' credit rating to ensure that it is high to avoid
Operational risks are the "cost overruns related to the firm's operations that are another
source of volatility in corporate cash flow" (Titman et al., 2017). Without proper risk
management, the financial health of a business can be affected. Failure due to improper
procedures, policies, and systems are just a few examples of how problems can occur without
proper management. McDonald's would need to ensure that plans are developed to accurately
assess the operational risks that may face.
With lower or higher sales growth, the dividend policy and retained earnings are affected.
With lower sales growth, McDonald's would be at risk due to the decrease in overall income,
retained earnings, etc. This means, as a result, the business would have to reevaluate its plans in
order to ensure that the business still runs smoothly and what alternatives can be made to ensure