McDonald’s Corporation (MCD)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,775,100 | 4,362,800 | 4,245,900 | 3,996,400 | 3,747,900 |
| Payables | US$ in thousands | 1,102,900 | 980,200 | 1,006,800 | 741,300 | 988,200 |
| Payables turnover | 4.33 | 4.45 | 4.22 | 5.39 | 3.79 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $4,775,100K ÷ $1,102,900K
= 4.33
Payables turnover ratio measures how efficiently a company is managing its accounts payable. A higher ratio indicates that the company is paying its suppliers more quickly. However, a very high ratio may also suggest that the company is not effectively utilizing trade credit or may have liquidity issues.
In the case of McDonald's Corp, the payables turnover ratio is consistently calculated as 0.00 for the past five years. This suggests that McDonald's is not effectively managing its accounts payable during these years. It could mean that the company is taking an extended period to pay its suppliers, which may lead to strained relationships with vendors or missed opportunities for early payment discounts.
Further analysis into the reasons behind the consistently low payables turnover ratio would be necessary to understand the implications for McDonald's working capital management and relationships with suppliers.
Peer comparison
Dec 31, 2023