McDonald’s Corporation (MCD)

Working capital 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
Revenue (ttm)	US$ in thousands	25,493,700	25,014,000	24,193,900	23,414,800	23,182,600	23,265,200	23,594,400	23,763,900	23,222,900	22,527,600	21,744,400	19,618,000	19,207,800	19,243,000	19,327,200	20,975,500	21,285,200	21,099,200	20,966,300	20,910,400
Total current assets	US$ in thousands	7,986,400	6,850,000	4,945,400	6,798,700	5,424,200	5,740,800	4,919,300	4,656,400	7,148,500	6,795,900	5,701,200	5,467,900	6,243,200	6,736,100	6,609,400	7,556,900	3,557,900	3,604,900	3,915,400	4,964,400
Total current liabilities	US$ in thousands	6,859,000	4,002,700	3,673,700	4,624,700	3,802,100	3,486,100	3,480,100	4,234,600	4,020,000	5,095,600	3,934,800	4,579,800	6,181,200	6,280,200	7,246,100	3,987,800	3,621,000	4,275,600	3,240,000	3,379,600
Working capital turnover		22.61	8.79	19.02	10.77	14.29	10.32	16.39	56.34	7.42	13.25	12.31	22.09	309.80	42.21	—	5.88	—	—	31.04	13.19

December 31, 2023 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $25,493,700K ÷ ($7,986,400K – $6,859,000K)
= 22.61

The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. A higher ratio indicates that the company is effectively managing its working capital.

Analyzing the working capital turnover ratios for McDonald's Corp over the past eight quarters shows fluctuations in efficiency. In Q1 2022, the ratio was exceptionally high at 56.34, indicating a very efficient use of working capital to generate revenue. This was followed by a significant drop in Q2 2022 to 16.39, but the ratio rebounded in Q3 2022 to 10.32.

Throughout 2023, the ratio displayed further variability with a notable peak in Q4 2023 at 22.61, indicating a significant improvement in working capital utilization compared to the previous quarters of the year.

Overall, McDonald's Corp has experienced fluctuations in its working capital turnover ratio, with periods of both exceptional efficiency and lower efficiency in utilizing its working capital to generate revenue. It is essential for the company to maintain a balance between efficient working capital management and sustaining higher levels of operational effectiveness to support its financial performance in the long term.