McDonalds Financial Statements and Financial Ratios Analyzed from 2014 to 2018

"McDonalds 2018 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA., doctoral candidate, and owner of Quality Business Plan.  In this summarized book, the author researched McDonalds 10k, McDonalds 2017 10k annual report, McDonalds 2016 10k annual report, McDonalds 2015 10k annual report, and McDonalds 2019 10k annual report as the basis for information gathering.  Once all of McDonalds 10k annual statements were collected, the author then inserted McDonald's income statement information and McDonalds balance sheet information into a customized financial template. 

McDonalds Income Statement 2018

Column1 2018 2017 2016 2015 2014
Revenues                    21,025                    22,820                    24,621                    25,413                      27,441
COGS                      3,154                      4,034                      4,897                      5,552                        6,130
Gross Profit                    17,871                    18,787                    19,724                    19,861                      21,311
SG&A                      2,200                      2,231                      2,384                      2,434                        2,488
Depreciation                            -                            -                            -                            -                             -
R & D                            -                            -                            -                            -                             -
Other                        (236)                     (1,163)                           76                         209                             19
Operating Expenses                      7,084                      8,166                      9,520                    10,072                      10,856
EBIT                      8,823                      9,553                      7,745                      7,145                        7,949
Other Income                           25                           58                            (6)                          (49)                               1
Interest Expense                         981                         921                         884                         638                           576
EBT                      7,816                      8,573                      6,866                      6,556                        7,372
Taxes                      1,892                      3,381                      2,179                      2,026                        2,614
Net Income                     5,924                     5,192                     4,687                     4,529                      4,758

McDonalds Company Summary From 2014 to 2018

McDonald's sells several food products, soft drinks, coffees, and other thirst-quenchers.  The quick-service restaurant services both breakfast and lunch menu items. As of 2019, the company runs over 37,000 establishments, including over 35,000 franchised-owned quick-service operations. The firm was founded in 1940.  Their headquarters is in Chicago, Illinois.  In the last several years, the company has been moving toward a healthier menu due to customer demand and governmental pressures.

McDonalds Balance Sheet

Column1 2018 2017 2016 2015 2014
Cash                           866                    2,464                    1,223                    7,686                    2,078
Short Term Investment                              -                         -                         -                         -                         -
Account Receivable                        2,442                    1,976                    1,474                    1,299                    1,214
Inventory                             51                         59                         59                       100                       110
Other                           695                       828                    2,092                       559                       783
Current Assets                       4,053                  5,327                  4,849                  9,643                  4,186
Net PPE                      22,843                  22,448                  21,258                  23,118                  24,558
Goodwill                        2,331                    2,380                    2,337                    2,516                    2,735
Other                              -                         -                         -                         -                         -
Total Assets                    32,811                33,804                31,024                37,939                34,281
Accounts Payable                        1,208                       925                       756                       875                       860
Accrued Expense                        1,284                    1,425                       481                    1,612                    1,391
Accrued Taxes                           481                       541                       534                       464                       497
Notes Payable                              -                         -
LT Debt - Current                              -                         -                         77                         -                         -
Other                              -                         -                         -                         -                         -
Total Current Liabilities                        2,974                    2,891                    4,849                    9,643                    2,748
LT Debt                      31,075                  29,536                  25,879                  24,122                  14,990
Other                        1,096                    1,154                    2,064                    2,074                    2,066
Total Liabilities                    26,553                30,536                28,820                30,851                21,428
Common Stock                        7,393                    7,089                    6,775                    6,550                    6,256
Treasury                    (61,529)                (56,504)                (52,109)                (41,177)                (35,177)
Retained Earnings                      50,487                  48,326                  46,223                  44,595                  43,295
Other                              -                         -                         -                         -                         -
Total Equity                     (6,258)                 (3,268)                 (2,204)                  7,088                12,853
Total Equity & Liability                    32,811                33,804                31,024                37,939                34,281

McDonalds Financial Ratio Summary From 2014 to 2018

McDonald’s total asset turnover as fallen from .80 in 2014 to .64 in 2018.  This reduction shows that the company is utilizing its assets less efficiently.

Inventory turnover for the company has increased from 249 in 2014 to 411 in 2018.  This indicates that the company is carrying less inventory.  This is fantastic because less inventory means using less restaurant space for storage.  However, this also means that if the restaurant does not order stock optimally, then sellouts are bound to happen.  This will inevitably lead to lost revenues.  Not so great.

Accounts Payable turnover had decreased from 31.9 in 2014 to 17.4 in 2018.  This action screams that the firm is paying its Accounts Payable at a significantly slower pace over time.  In other words, McDonald’s vendors have to wait longer for their checks.  This may inevitably lead to less loyalty by suppliers.

McDonalds Liquidity Ratios

Ratios 2018 2017 2016 2015 2014
Current Ratio                           1.36                    1.84                    1.00                    1.00                    1.52
Cash Ratio                           0.29                    0.85                    0.25                    0.80                    0.76
Quick Ratio                           1.35                    1.82                    0.99                    0.99                    1.48
Net Working Capital                            386                  1,608                     986                  6,134                     654

McDonalds Asset Utilization

Ratios 2018 2017 2016 2015 2014
Total Asset Turnover                           0.64                    0.68                    0.79                    0.67                    0.80
Fixed Asset Turnover                           0.92                    1.02                    1.16                    1.10                    1.12
Days Sales Outstanding                         42.39                  31.61                  21.85                  18.65                  16.15
Inventory Turnover                       411.45                388.10                418.01                253.88                249.46
Accounts Receivable Turnover                           8.61                  11.55                  16.70                  19.57                  22.60
Working Capital Turnover                         54.50                  14.19                  24.96                    4.14                  41.93
AP Turnover                         17.41                  24.68                  32.57                  29.05                  31.90
Average Days Inventory                           1.13                    1.06                    1.15                    0.70                    0.68
Average Days Payable                           0.05                    0.07                    0.09                    0.08                    0.09

McDonalds Profitability Ratios

Ratios 2018 2017 2016 2015 2014
Return on Assets 18.05% 15.36% 15.11% 11.94% 13.88%
Return on Equity -94.66% -158.87% -212.61% 63.90% 37.02%
Net Profit Margin 28.18% 22.75% 19.03% 17.82% 17.34%
Gross Profit Margin 85.00% 82.32% 80.11% 78.15% 77.66%
Operating Profit Margin 41.96% 41.86% 31.45% 28.12% 28.97%
Basic Earning Power 26.89% 28.26% 24.96% 18.83% 23.19%
ROCE 29.57% 30.90% 29.59% 25.25% 25.21%
Capital Employed                       29,838                30,913                26,175                28,296                31,533
ROIC 28.79% 24.05% 23.77% 16.88% 20.35%

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