McDonald’s Corporation (MCD)

Receivables turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Revenue	US$ in thousands	25,920,000	25,494,000	23,182,600	23,222,900	19,207,800
Receivables	US$ in thousands	2,383,000	2,488,000	2,115,000	1,872,400	2,110,300
Receivables turnover		10.88	10.25	10.96	12.40	9.10

December 31, 2024 calculation

Receivables turnover = Revenue ÷ Receivables
= $25,920,000K ÷ $2,383,000K
= 10.88

To analyze McDonald’s Corporation's receivables turnover, we examine the trend in the ratio over the past five years. The receivables turnover ratio measures how efficiently a company is collecting on its credit sales within a specific period.

In 2020, McDonald's had a receivables turnover ratio of 9.10, indicating that the company collected its outstanding receivables approximately 9.10 times during the year. This implies that it took around 40 days (365 days divided by 9.10) for McDonald's to collect on its credit sales in 2020.

By the end of 2021, the receivables turnover ratio increased significantly to 12.40. This suggests that McDonald's improved its efficiency in collecting receivables, managing to collect outstanding amounts 12.40 times during the year. The decrease in the turnover days to around 29 days (365 days divided by 12.40) signals a more efficient collection process.

In 2022, the receivables turnover ratio slightly decreased to 10.96, indicating a small decline in the efficiency of receivables collection compared to the previous year. However, McDonald's was still able to collect on its credit sales approximately 10.96 times, with the collection period averaging around 33 days (365 days divided by 10.96).

In 2023, the turnover ratio further decreased to 10.25, suggesting a continuing trend of slightly reduced efficiency in collecting receivables compared to the prior year. This ratio means that McDonald’s collected outstanding receivables around 10.25 times during the year, with an average collection period of approximately 36 days (365 days divided by 10.25).

By the end of 2024, the receivables turnover ratio rebounded to 10.88, showing an improvement in receivables collection efficiency from the previous year. McDonald's managed to collect on its credit sales about 10.88 times, with the average collection period slightly shorter at around 33 days (365 days divided by 10.88).

Overall, the trend in McDonald's Corporation's receivables turnover ratio demonstrates fluctuations in efficiency in collecting outstanding receivables over the past five years. The company showed notable improvement in 2021, followed by slight variations in subsequent years. Monitoring this ratio can provide insights into McDonald's effectiveness in managing its accounts receivable and cash flow.