McDonalds Financial Statements and Financial Ratios Analyzed from 2016 to 2020

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Hey All,

Thanks for visiting my McDonald’s Financial Report page. On this page, you will be able to find preliminary information about McDonald’s current financial performance as well as some historical track records and trends. 

For a more detailed examination of McDonald’s financial performance, please check out the "Financial Report".  In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Summary analysis by myself of the important income statement, balance sheet, and financial ratio trends, and other happenings.
  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
  • Professional financial analysis tips are provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is where I use plain English to explain concepts.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul MBA. (Updated 2021)

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McDonalds 2020 Financial Report by Paul Borosky, MBA.
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Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

McDonald's Company Summary From 2016 to 2020

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 2020, 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.

McDonald's Financial Report Sources

"McDonald's 2020Financial 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 McDonald's 10k, McDonald's 2019 10k annual report, McDonald's 2016 10k annual report, McDonald's 2020 10k annual report, and McDonald's 2019 10k annual report as the basis for information gathering.  Once all of McDonald's 10k annual statements were collected, the author then inserted McDonald's income statement information and McDonald's balance sheet information into a customized financial template. 

Section 1: McDonald's Income Statement Analyzed 2016 to 2020

In this section, I walk through a broad definition as to what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of McDonald's important income statement line item trends from 2016 to 2020, in most cases.

Revenue Growth:  In 2016, McDonald’s had revenues of approximately $24.6 billion.  In the next four years, the organization’s revenues will continually decline, ending 2020 at $19.2 billion.  This continued trend indicates that the organization is losing market share to competitors.  Also, this may indicate that consumer tastes are shifting away from unhealthy foods to more healthy choices.  To mitigate continued revenue losses, the firm needs to reevaluate its target market’s needs and desires and better align its menu selection with those needs.

McDonald's Summary Income Statement 2020

Column1

2020

2019 2018 2017

2016

Revenues                    19,207                    21,364                    21,257                    22,820                      24,621
COGS                      2,564                      2,980                      3,154                      4,034                        4,897
Gross Profit                    16,643                    18,384                    17,871                    18,787                      19,724
 
SG&A                      2,245                      1,966                      1,985                      2,231                        2,384
Depreciation                      1,751                      1,617                      1,482                      1,363                        1,516
R & D                            -                            -                            -                            -                             -
Other                            -                            -                            -                            -                             -
Operating Expenses                    11,883                    12,006                    12,020                    13,267                      16,877
EBIT                      7,324                      9,069                      8,823                      9,553                        7,745
Other Income                            -                            -                            -                            -                             -
Interest Expense                      1,218                      1,121                         981                         921                           884
EBT                      6,140                      8,018                      7,816                      8,573                        6,866
Taxes                      1,410                      1,992                      1,892                      3,381                        2,179
Net Income                     4,730                     6,025                     5,924                     5,192                      4,687
Tax Rate 23.0% 24.8% 24.2% 39.4% 31.7%

Section 2: McDonald's Balance Sheet Analyzed from 2016 to 2020

For McDonald's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define McDonald's balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2016 to 2020.  Next, I then offer an analysis of McDonald's balance sheet line item.

Cash:  McDonald’s cash position ended 2016 at $1.2 billion.  In the next year, the organization would significantly increase its cash position ending 2017 at $2.4 billion.  However, in 2018, the organization’s cash position would fall, ending the year at $866 million.  Fortunately, though, the organization would substantially improve its cash position over the next two years ending 2020 at $3.4 billion. 

McDonald's Summary Balance Sheet 2020

 
Column1

2020

2019 2018 2017

2016

Cash

                       3,449

                      898                       866                    2,464

                   1,223

Short Term Investment                              -                         -                         -                         -                         -
Account Receivable

                       2,110

                   2,224                    2,442                    1,976

                   1,474

Inventory

                            51

                        50                         51                         59

                        59

Other                              -                         -                         -                         -                         -
Current Assets

                      6,243

                 3,557                  4,053                  5,327

                 4,849

Net PPE

                     24,958

                 24,160                  22,843                  22,448

                 21,258

Goodwill

                       2,773

                   2,677                    2,331                    2,380

                   2,337

Other                              -                         -                         -                         -                         -
Total Assets

                   52,626

               47,510                32,811                33,804

               31,024

 
Accounts Payable

                          741

                      988                    1,208                       925

                      756

Accrued Expense

                       1,526

                   1,372                    1,284                    1,425

                      481

Accrued Taxes

                          968

                      578                       481                       541

                      534

Notes Payable                         -                         -                         -
LT Debt - Current

                       2,243

                        59                         -                         -

                        77

Other                              -                         -                         -                         -                         -
Total Current Liabilities

                       6,181

                   3,621                    2,974                    2,891

                   4,849

 
LT Debt

                     35,196

                 34,118                  31,075                  29,536

                 25,879

Other                              -                         -                         -                         -                         -
Total Liabilities

                   44,802

               39,300                26,553                30,536

               28,820

 
Common Stock

                       7,903

                   7,653                    7,393                    7,089

                   6,775

Treasury

                   (67,066)

               (66,328)                (61,529)                (56,504)

               (52,109)

Retained Earnings

                     53,908

                 52,930                  50,487                  48,326

                 46,223

Other                              -                         -                         -                         -                         -
Total Equity

                    (7,824)

                (8,210)                 (6,258)                 (3,268)

                (2,204)

Total Equity & Liability

                   52,626

               47,510                32,811                33,804

               31,024

Section 3: McDonald's Financial Ratio Summary From 2016 to 2020

For this section, I have chosen several different financial ratios to review for McDonald's Inc from 2016 to 2020.  In reviewing each of McDonald’s financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of McDonald's Important Financial ratios. 

McDonald's Total Asset Turnover

McDonald’s ended 2016 with a total asset turnover of .79.  In the next four years, the organization would continually underutilize total assets ending 2020 at .36.  The continued underutilization of total assets shows that the firm’s asset utilization strategies have perpetually failed.  A better strategy would be to sell off underperforming fixed assets.  By divesting these assets, the organization will better utilize assets under management which would, in turn, improve this ratio.

McDonald's Return on Assets

McDonald’s fixed asset turnover ended 2016 at 1.16.  Again, in the next several years, the organization’s fixed asset turnover would continually fall, ending 2020 at .77.  It does seem like McDonald’s has a significant amount of fixed assets that are underutilized.  To mitigate this problem, divesting underutilize fixed assets is an excellent starting point.  In other words, start selling stuff that’s not being used efficiently.

McDonald's Liquidity Ratios 2020
Ratios

2020

2019 2018 2017

2016

Current Ratio

                          1.01

                   0.98

Cash Ratio

                          0.56

                   0.25

Quick Ratio

                          1.00

                   0.97

Net Working Capital

                        2,375

                    234

 

McDonald's Asset Utilization Ratios 2020
Ratios

2020

2019 2018 2017

2016

Total Asset Turnover

                          0.36

                   0.45

Fixed Asset Turnover

                          0.77

                   0.88

Days Sales Outstanding

                        40.10

                 38.00

Inventory Turnover

                      376.61

               427.28

Accounts Receivable Turnover

                          9.10

                   9.61

Working Capital Turnover

                          8.09

                 91.30

AP Turnover

                        25.92

                 21.62

Average Days Inventory

                          1.03

                   1.17

Average Days Payable

                          0.07

                   0.06

 

McDonald's Profitability Ratios 2020
Ratios

2020

2019 2018 2017

2016

Return on Assets

8.99%

12.68%

Return on Equity

-60.46%

-73.39%

Net Profit Margin

24.63%

28.20%

Gross Profit Margin

86.65%

86.05%

Operating Profit Margin

38.13%

42.45%

Basic Earning Power

13.92%

19.09%

ROCE

15.77%

20.66%

Capital Employed

                      46,445

               43,889

ROIC

20.64%

27.94%

 

McDonald's Long-term Debt Ratios 2020

Ratios

2020

2019 2018 2017

2016

Debt Ratio

66.88%

71.81%

Debt/Equity

-449.85%

-415.57%

Times Interest Earned

                          6.01

                   8.09