McDonalds Financial Statements and Financial Ratios Analyzed
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, I offer two reports, which are "A Beginner's Guide to McDonald's Financial Analysis" and "McDonald's Financial Report by Paul Borosky, MBA." Both reports are written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, and include:
- Summarized income statements for the last 5 years.
- Summarized balance sheets for the last 5 years.
- Five years’ 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.
For a MORE in-depth review of the company's financial statements and ratios, make sure to buy my "McDonald's Financial Report". The financial report includes all aspects of my "Beginner's Guide" plus a whole lot more...
- Professional financial analysis of important income statements, balance sheets, and financial ratio trends.
- "Letter Grade" is assigned to most financial statement line items and financial ratios to help you better understand their overall trends for the last 5 years.
- Overall financial analysis summary for the company.
Enjoy the preliminary information and for a more detailed analysis, buy the financial report!
Sincerely,
Paul, MBA.
PDF/Downloadable Version
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- Included - Free Bonus Downloads: Annual Statements for the Last Five Years (10k reports)!
- Included - Expert financial analysis done by Paul Borosky MBA.
- Included - Analyst "Letter Grades" for ratios.
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Sample Financial Report
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 |
|
|||
