McDonald’s Corporation (MCD)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	1,085,000	4,579,000	2,583,800	4,709,200	3,449,100
Short-term investments	US$ in thousands	—	300	—	300	1,297,000
Total current liabilities	US$ in thousands	3,861,000	6,859,000	3,802,100	4,020,000	6,181,200
Cash ratio		0.28	0.67	0.68	1.17	0.77

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,085,000K + $—K) ÷ $3,861,000K
= 0.28

The cash ratio of McDonald’s Corporation has fluctuated over the years, with a noticeable increase from 2020 to 2021, reaching a peak of 1.17. However, in subsequent years, the cash ratio experienced a decline, dropping to 0.67 by the end of 2023 and then a significant decrease to 0.28 by the end of 2024.

A cash ratio below 1 indicates that McDonald’s may not have enough liquid assets to cover its short-term liabilities, which could potentially signal financial risk. The downward trend in the cash ratio from 2021 to 2024 may suggest that McDonald’s is investing heavily in growth opportunities or facing challenges in managing its cash resources efficiently.

It is important for McDonald’s to closely monitor its cash position and liquidity management to ensure it can meet its short-term obligations and maintain financial stability in the long run.