McDonald’s Corporation (MCD)

Cash conversion cycle

		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
Cash conversion cycle	days	-35.06	-34.23	-35.51	-37.24	-47.78	-33.41	-29.60	-31.34	-44.36	-32.19	-29.00	-30.06	-52.34	-32.55	-30.71	-24.66	-23.16	-16.19	7.19	-31.04

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.95 + 33.56 – 72.56
= -35.06

The cash conversion cycle for McDonald's Corporation has shown varying trends over the years based on the provided data. A negative cash conversion cycle indicates that the company is efficiently managing its working capital, allowing it to generate cash inflows before having to pay its suppliers.

From March 31, 2020, to December 31, 2024, McDonald's cash conversion cycle has generally remained negative, ranging from -31.04 days to -35.06 days. This suggests that the company has been able to convert its inventory and receivables into cash quickly, enabling it to operate smoothly without tying up excessive funds in working capital.

The period saw fluctuations in the cash conversion cycle, with some quarters showing a more efficient cycle (e.g., -52.34 days in December 31, 2021) compared to others. However, the overall trend points towards effective management of operating cycle components.

Analyzing the cash conversion cycle can provide insights into McDonald's liquidity and operational efficiency. A consistently negative cycle signifies that McDonald's is adept at managing its cash flows, which is crucial for sustaining operations and investing in growth opportunities. This efficiency reflects positively on the company's financial health and ability to meet its short-term obligations effectively.