McDonald’s Corporation (MCD)

Activity ratios

Short-term

Turnover ratios

	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
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
Receivables turnover	10.88	10.54	10.71	11.51	10.25	11.13	11.03	11.28	10.96	12.31	12.85	14.20	12.40	12.32	12.02	11.32	9.10	8.05	6.78	12.37
Payables turnover	5.03	5.00	4.99	5.03	4.17	5.21	5.44	5.37	4.45	5.58	5.98	6.09	4.22	5.49	5.59	5.98	5.37	5.55	7.20	5.68
Working capital turnover	35.12	—	87.31	—	22.62	8.79	19.03	10.77	14.29	10.32	16.39	56.34	7.42	13.25	12.31	22.09	309.80	42.21	—	5.88

McDonald’s Corporation's activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory Turnover: McDonald’s inventory turnover has fluctuated over the years but generally remains high, indicating that the company effectively sells its inventory. The increase in inventory turnover from June 2022 to December 2022 and the subsequent decline could suggest changes in sales patterns or inventory management.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently McDonald’s collects payments from its customers. The ratio has shown stability over the years, with a slight dip in December 2023. This indicates that McDonald’s is effective in collecting payments from its customers in a timely manner.

3. Payables Turnover: The payables turnover ratio measures how efficiently McDonald’s pays its suppliers. The ratio has decreased over the years, indicating a longer payment period to suppliers. A higher turnover ratio would indicate more efficient management of payables.

4. Working Capital Turnover: McDonald’s working capital turnover has varied significantly over the years, indicating changes in the utilization of working capital. A positive ratio suggests that the company effectively utilizes its working capital to generate sales. The negative ratio in some periods could be a result of fluctuations in working capital management.

In conclusion, McDonald’s Corporation demonstrates efficiency in managing its inventory and receivables turnover. However, there could be opportunities to enhance payables turnover and optimize working capital turnover for improved financial efficiency.

Average number of days

		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
Days of inventory on hand (DOH)	days	3.95	4.18	3.54	3.56	4.21	3.87	4.36	4.31	4.35	3.57	3.57	4.14	4.78	4.31	4.27	4.13	4.68	4.22	4.01	3.74
Days of sales outstanding (DSO)	days	33.56	34.62	34.07	31.70	35.62	32.79	33.09	32.35	33.30	29.65	28.41	25.71	29.43	29.63	30.35	32.26	40.10	45.37	53.87	29.50
Number of days of payables	days	72.56	73.03	73.12	72.50	87.61	70.06	67.05	68.01	82.01	65.41	60.99	59.91	86.55	66.49	65.34	61.05	67.95	65.78	50.69	64.29

Based on the provided data, McDonald's Corporation's activity ratios can be analyzed as follows:

1. Days of Inventory on Hand (DOH): McDonald's has shown varying trends in its inventory management efficiency over the quarters. The trend started at 3.74 days on March 31, 2020, increasing gradually to a peak of 4.78 days on December 31, 2021, before decreasing slightly to 4.21 days by the end of December 31, 2023. However, it improved by the end of June 30, 2024, to 3.95 days. Overall, McDonald's has been able to keep its inventory turnover relatively stable, indicating effective management in this area.

2. Days of Sales Outstanding (DSO): McDonald's collection efficiency has generally been strong, with DSO values ranging from 25.71 to 35.62 days. The lowest DSO was reported on March 31, 2022, while the highest was observed on December 31, 2023. The trend indicates that McDonald's has been successful in managing its accounts receivables effectively, with a relatively stable performance over time.

3. Number of Days of Payables: McDonald's payables management has shown some fluctuations over the quarters, with values ranging from 50.69 to 87.61 days. The lowest number of days recorded was on June 30, 2020, while the highest was on December 31, 2023. Despite the fluctuations, McDonald's has maintained a balance in its payables turnover, ensuring it meets its financial obligations without causing strain on its cash flow.

Overall, McDonald's Corporation has demonstrated effective management of its activity ratios, maintaining a balance between inventory turnover, accounts receivable collection, and accounts payable turnover, which is essential for its operational efficiency and financial health.

Long-term

	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
Fixed asset turnover	1.02	1.01	1.04	1.04	1.02	1.05	1.00	0.98	0.98	1.02	1.01	0.97	0.94	0.92	0.88	0.80	0.77	0.79	0.81	0.89
Total asset turnover	0.47	0.46	0.48	0.48	0.45	0.48	0.48	0.45	0.46	0.48	0.48	0.47	0.43	0.43	0.42	0.38	0.36	0.38	0.39	0.41

The fixed asset turnover ratio of McDonald's Corporation has shown a slight increase over the years, starting at 0.89 in March 2020 and reaching 1.02 in September 2024. This indicates that the company is generating more revenue in relation to its fixed assets.

In comparison, the total asset turnover ratio has also demonstrated an upward trend, from 0.41 in March 2020 to 0.47 in December 2024. This suggests that McDonald's is utilizing its total assets more efficiently to generate sales.

Overall, both ratios depict an improvement in the company's efficiency in utilizing its assets to generate revenue over the years, reflecting positive long-term activity performance for McDonald's Corporation.