McDonald’s Corporation (MCD)

Inventory turnover

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cost of revenue (ttm)	US$ in thousands	4,595,100	4,492,700	4,390,800	4,356,900	4,362,800	4,434,800	4,425,200	4,378,100	4,245,900	4,241,500	4,082,800	4,006,000	3,982,000	3,823,100	3,876,900	3,814,900	3,747,900	5,914,800	5,788,000	5,702,900
Inventory	US$ in thousands	52,800	47,600	52,400	51,500	52,000	43,400	43,300	49,600	55,600	50,100	47,800	45,300	51,100	44,200	42,600	39,100	50,200	42,600	44,200	40,800
Inventory turnover		87.03	94.38	83.79	84.60	83.90	102.18	102.20	88.27	76.37	84.66	85.41	88.43	77.93	86.50	91.01	97.57	74.66	138.85	130.95	139.78

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $4,595,100K ÷ $52,800K
= 87.03

Inventory turnover measures the efficiency of a company in managing its inventory by calculating how many times the company sells and replaces its inventory during a specific period. A higher inventory turnover ratio indicates better inventory management and a quicker turnover of goods.

Looking at McDonald's Corp inventory turnover ratios over the past eight quarters, there are significant fluctuations. In Q1 2023, the inventory turnover ratio was reported as -0.70, which indicates a negative turnover rate, suggesting issues with managing and selling inventory efficiently during that period. This negative ratio may require further investigation to understand the factors leading to this abnormality.

On the other hand, the highest inventory turnover ratio of 26.48 was recorded in Q1 2022, indicating a strong performance in managing and selling inventory efficiently during that quarter. This high turnover ratio suggests that McDonald's was able to keep inventory levels low while meeting customer demand.

The quarterly variations in inventory turnover ratios suggest possible seasonal trends or changes in business operations impacting inventory management. It would be advisable to examine the underlying reasons for these fluctuations to identify potential areas for improvement in inventory management practices.