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 2021 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.
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Sample Financial Report
McDonald's Company Summary
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 2021, 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 2021 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 McDonald's 10k, McDonald's 2019 10k annual report, McDonald's 2016 10k annual report, McDonald's 2021 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
In this section, I walk through a broad definition of 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: McDonald’s revenues increased in 2019 moderately (.5% growth) and substantially in 2021 (20.9% growth). However, in 2020, the firm’s revenues declined by 10.1%. On average, their revenue growth rate for the last five years was 1.1%, which seems a bit underwhelming. An important trend identified is their inconsistency in revenue growth. Consistency may reduce perceived risk with investing in the company.
Analyst Grade: B
McDonald's 2021 Summary Income Statements |
|||||
| Column1 |
2021 |
2020 | 2019 | 2018 |
2017 |
| Revenues |
23,223 |
19,207 | 21,364 | 21,257 |
22,820 |
| COGS |
3,097 |
2,564 | 2,980 | 3,154 |
4,034 |
| Gross Profit |
20,126 |
16,643 | 18,384 | 17,871 |
18,787 |
| SG&A |
2,378 |
2,245 | 1,966 | 1,985 |
2,231 |
| Depreciation |
1,868 |
1,751 | 1,617 | 1,482 |
1,363 |
| R & D | - | - | - | - | - |
| Other | - | - | - | - | - |
| Total Operating Expenses |
9,770 |
9,319 | 9,026 | 8,866 |
9,234 |
| EBIT |
10,356 |
7,324 | 9,069 | 8,823 |
9,553 |
| Other Income | - | - | - | - | - |
| Interest Expense |
1,186 |
1,218 | 1,121 | 981 |
921 |
| EBT |
9,128 |
6,140 | 8,018 | 7,816 |
8,573 |
| Taxes |
1,583 |
1,410 | 1,992 | 1,892 |
3,381 |
| Net Income |
7,545 |
4,730 | 6,025 | 5,924 |
5,192 |
Section 2: McDonald's Balance Sheet Analyzed
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 items, such as cash, property, plant and equipment, and liabilities. Next, I then offer an analysis of McDonald's balance sheet line item.
Cash: McDonald’s cash position was $866 million in 2018. In 2021, their cash position increased to $4.7 billion. This change shows that McDonald’s had taken steps to increase its cash holdings over a several-year period. In the future, investors should anticipate moderate continued growth in the firm’s cash position. The strategy will enable the company to ensure adequate liquid assets to cover short-term financial liabilities.
Analyst Grade: A
McDonald's 2021 Summary Balance Sheets |
|||||
| Column1 |
2021 |
2020 | 2019 | 2018 |
2017 |
| Cash |
4,709 |
3,449 | 898 | 866 |
2,464 |
| Short Term Investment | - | - | - | - | - |
| Account Receivable |
1,872 |
2,110 | 2,224 | 2,442 |
1,976 |
| Inventory |
56 |
51 | 50 | 51 |
59 |
| Other | - | - | - | - | - |
| Current Assets |
7,149 |
6,243 | 3,557 | 4,053 |
5,327 |
| Net PPE |
24,721 |
24,958 | 24,160 | 22,843 |
22,448 |
| Goodwill |
2,783 |
2,773 | 2,677 | 2,331 |
2,380 |
| Other | - | - | - | - | |
| Total Assets |
53,854 |
52,626 | 47,510 | 32,811 |
33,804 |
| Accounts Payable |
1,007 |
741 | 988 | 1,208 |
925 |
| Accrued Expense |
1,347 |
1,138 | 1,035 | 1,284 |
1,425 |
| Accrued Taxes |
597 |
968 | 578 | 481 |
541 |
| Notes Payable | - | - | - | ||
| LT Debt - Current | - |
2,243 |
59 |
- | - |
| Other | - | - | - | - | |
| Total Current Liabilities |
4,020 |
6,181 | 3,621 | 2,974 |
2,891 |
| LT Debt |
35,623 |
35,196 | 34,118 | 31,075 |
29,536 |
| Other | - | - | - | - | - |
| Total Liabilities |
58,455 |
44,802 | 39,300 | 26,553 |
30,536 |
| Common Stock |
8,248 |
7,903 | 7,653 | 7,393 |
7,089 |
| Treasury |
(67,810) |
(67,066) | (66,328) | (61,529) |
(56,504) |
| Retained Earnings |
57,535 |
53,908 | 52,930 | 50,487 |
48,326 |
| Other | - | - | - | - | - |
| Total Equity |
(4,601) |
(7,824) | (8,210) | (6,258) |
(3,268) |
| Total Equity & Liability |
53,854 |
52,626 | 47,510 | 32,811 |
33,804 |
Section 3: McDonald's Financial Ratio Summary
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 total asset turnover was .68 in 2017. As of 2021, their total asset turnover was .43. This trend shows that the company has become less efficient in utilizing its total assets to generate sales. In the future, investors should expect McDonald’s to reduce their total asset holdings to ensure optimized use of the company’s total assets.
Analyst Grade: B
McDonald's Return on Assets
McDonald’s return on assets ROA was 8.99% in 2020. As of 2021, their ROA was 14.01%. This trend shows that the company improved its net profits generated from total assets under management over the previous year. In the future, investors should expect this trend to continue, especially if the firm continues to divest underutilized fixed assets.
Analyst Grade: B+
| 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 |
|
|||