McDonald’s Corporation (MCD)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.16 | 1.71 | 1.35 | 1.47 | 1.43 | 1.65 | 1.41 | 1.10 | 1.78 | 1.33 | 1.45 | 1.19 | 1.01 | 1.07 | 0.91 | 1.90 | 0.98 | 0.84 | 1.21 | 1.47 |
| Quick ratio | 1.03 | 1.43 | 1.04 | 1.25 | 1.24 | 1.35 | 1.08 | 0.95 | 1.64 | 1.43 | 1.54 | 1.30 | 1.11 | 1.17 | 0.84 | 1.77 | 0.86 | 0.74 | 0.98 | 1.27 |
| Cash ratio | 0.67 | 0.87 | 0.45 | 0.80 | 0.68 | 0.81 | 0.56 | 0.55 | 1.17 | 1.07 | 1.08 | 0.92 | 0.77 | 0.79 | 0.45 | 1.35 | 0.25 | 0.28 | 0.35 | 0.68 |
McDonald's Corp's liquidity ratios have shown some fluctuations over the past eight quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with current assets, has ranged from 1.10 to 1.71. The highest current ratio was observed in Q3 2023, indicating a strong ability to meet short-term obligations, while the lowest was recorded in Q1 2022.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also shown variability, ranging from 1.09 to 1.70. Similar to the current ratio, the quick ratio was highest in Q3 2023 and lowest in Q1 2022.
The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has fluctuated between 0.69 and 1.14. The highest cash ratio was observed in Q3 2023, indicating a relatively strong cash position, while the lowest was recorded in Q1 2022.
Overall, McDonald's Corp's liquidity ratios suggest that the company has generally maintained a solid ability to meet its short-term obligations, with some variability in liquidity levels over the past two years. Monitoring these ratios over time can provide valuable insights into the company's financial health and ability to weather potential financial challenges.
See also:
McDonald’s Corporation Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -47.79 | -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 | -53.21 | -15.10 | -11.68 | -15.32 |
The cash conversion cycle of McDonald's Corp has shown significant variability over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 35.62 days, indicating the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. This suggests that McDonald's is efficiently managing its working capital during that quarter.
However, in Q3 2023 and Q2 2023, the cash conversion cycle was negative at -431.32 days and -931.46 days, respectively. A negative cash conversion cycle implies that the company is generating cash from its operating cycle before paying its suppliers, which can be a positive sign of strong liquidity management and efficient operations.
In Q1 2023, the cash conversion cycle was 32.35 days, indicating an efficient use of working capital. This trend continued in Q4 2022 and Q3 2022, with cash conversion cycles of 33.30 days and 29.65 days, respectively, suggesting consistent management of working capital.
However, in Q2 2022 and Q1 2022, the cash conversion cycles were negative at -497.62 days and -160.22 days, respectively. Again, this indicates that McDonald's was able to generate cash from its operating cycle before paying its suppliers during those quarters.
Overall, although there has been variability in McDonald's cash conversion cycle in recent quarters, the company has demonstrated efficient working capital management and effective cash flow generation in several periods. This suggests that McDonald's Corp has been successful in optimizing its operational efficiency and liquidity position.