McDonald’s Corporation (MCD)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	5,176,000	4,718,200	4,737,100	4,712,000	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
Inventory	US$ in thousands	56,000	54,000	46,000	46,000	53,000	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
Inventory turnover		92.43	87.37	102.98	102.43	86.70	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

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $5,176,000K ÷ $56,000K
= 92.43

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory during a specific period. A high inventory turnover ratio indicates that a company is selling its inventory quickly, which is generally seen as positive as it reduces the risk of inventory obsolescence or spoilage.

Analyzing the inventory turnover of McDonald’s Corporation over the past few years, we can see fluctuations in the ratio. From March 31, 2020, to December 31, 2024, McDonald’s inventory turnover ranged from a low of 76.37 to a high of 102.98. The average inventory turnover during this period was approximately 89.35.

In general, a higher inventory turnover ratio is preferred as it signifies that a company is effectively managing its inventory levels and turning over stock more frequently. A lower turnover ratio may indicate inventory management issues, such as overstocking or slow-moving inventory.

McDonald’s inventory turnover has shown some variability over the years, with some quarters exhibiting higher turnover than others. It is important for the company to closely monitor its inventory levels and sales to ensure optimal inventory turnover and minimize the risk of holding excessive inventory.