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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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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