1. What are the top four countries from which McDonald’s acquired its debt? A lot of new business owners today use open forms of mobilizing loans from financial institutions or individuals if they do not want to call for other investors to take total control of the business. Mobilize the majority of loans are used when just starting a new business. Depend on each country, on the population and the need of each country to open more McDonald’s restaurant. From this, the debt will raise on how many of restaurant in each country.
In million of U.S dollar, US borrowed 8725.7 in 2012 and 8360.6 in 2013, Europe borrowed 2195.2 in 2012 and 3242.1 in 2013, Japan borrowed 1067.5 in 2012 and 878.5 in 2013, British borrowed 730.1 in 2012 and …show more content…
Why does McDonald’s need to finance up to 40 percent of its assets with debt? Business activities through mobilizing loans allow business owners took control of the entire business operation. The interest rate payable on the loan is considered as eligible costs and is tax deductible. This deduction is part of the profits of the enterprise and helps reduce the amount of annual tax business. Creditors of the business are not entitled to the company 's profits. The companies in the industry with low business risk, stable cash flow more often use debt. Therefore, McDonald needs to finance up to 40 percent of its assets with debt for the long-term bond. The equipment, building, and land need a huge investment. To save the time of collecting the investment, McDonald finances with debt. McDonald only pays the same interest in each period of time. So the owner does not need to have large investment or share with another investor. They get the benefits from debt. And with this debt fund, McDonald can use for any stable expenses. On the other hand, the debt does not really help with the long-term bond. If the business faces a risk in later time, they may be struggling with the interest …show more content…
A long-term loan is an important source of credit for the development of enterprises. Long-term loans are generally understood to be loans in more than a year time. Long-term loan interest rate can be fixed rate or floating rate depending on the negotiations between the two sides. Long-term loans usually have some financial benefits related to short-term debts. Interest rates are often lower because the assets generally secure long-term loans. So people use this long-term debt to invest into big business. Besides, during the business, when the companies need more money for their business or they are not able to pay back the debt, they may issue the long-term bond. Bond is a loan that the issuers borrow from the buyer of bonds- bondholders. Governments, businesses, and local governments issue bonds at all levels to raise more capital. Bonds pay periodic interest and repay the principal at a specified time. McDonald was using these long-term bonds for the land, the equipment, the building, because those things have expensive cost and it needs a long time to cover. It can help the business continue to running and lowest risk. By Bank loan, the owner does not need to share the profit with another person. The owner only needs to pay the interest for the bank, and this interest is stable. Bank loan can use for short-term debt. So the business may use this loan for
In million of U.S dollar, US borrowed 8725.7 in 2012 and 8360.6 in 2013, Europe borrowed 2195.2 in 2012 and 3242.1 in 2013, Japan borrowed 1067.5 in 2012 and 878.5 in 2013, British borrowed 730.1 in 2012 and …show more content…
Why does McDonald’s need to finance up to 40 percent of its assets with debt? Business activities through mobilizing loans allow business owners took control of the entire business operation. The interest rate payable on the loan is considered as eligible costs and is tax deductible. This deduction is part of the profits of the enterprise and helps reduce the amount of annual tax business. Creditors of the business are not entitled to the company 's profits. The companies in the industry with low business risk, stable cash flow more often use debt. Therefore, McDonald needs to finance up to 40 percent of its assets with debt for the long-term bond. The equipment, building, and land need a huge investment. To save the time of collecting the investment, McDonald finances with debt. McDonald only pays the same interest in each period of time. So the owner does not need to have large investment or share with another investor. They get the benefits from debt. And with this debt fund, McDonald can use for any stable expenses. On the other hand, the debt does not really help with the long-term bond. If the business faces a risk in later time, they may be struggling with the interest …show more content…
A long-term loan is an important source of credit for the development of enterprises. Long-term loans are generally understood to be loans in more than a year time. Long-term loan interest rate can be fixed rate or floating rate depending on the negotiations between the two sides. Long-term loans usually have some financial benefits related to short-term debts. Interest rates are often lower because the assets generally secure long-term loans. So people use this long-term debt to invest into big business. Besides, during the business, when the companies need more money for their business or they are not able to pay back the debt, they may issue the long-term bond. Bond is a loan that the issuers borrow from the buyer of bonds- bondholders. Governments, businesses, and local governments issue bonds at all levels to raise more capital. Bonds pay periodic interest and repay the principal at a specified time. McDonald was using these long-term bonds for the land, the equipment, the building, because those things have expensive cost and it needs a long time to cover. It can help the business continue to running and lowest risk. By Bank loan, the owner does not need to share the profit with another person. The owner only needs to pay the interest for the bank, and this interest is stable. Bank loan can use for short-term debt. So the business may use this loan for