McDonald’s Corporation (MCD)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.19 | 0.78 | 1.08 | 0.83 | 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 |
| Quick ratio | 0.90 | 0.58 | 1.25 | 2.51 | 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 |
| Cash ratio | 0.28 | 0.19 | 0.63 | 2.05 | 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 |
The liquidity ratios of McDonald’s Corporation indicate its ability to meet short-term obligations and manage its current assets effectively.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated over the years but generally stayed above 1. This suggests McDonald’s has had sufficient current assets to cover its current liabilities during most periods, reflecting a healthy liquidity position.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also shows fluctuations but remains above 1 for the majority of the periods. This indicates that McDonald’s can meet its immediate short-term obligations without relying on selling inventory quickly, demonstrating strong liquidity management.
The cash ratio, which offers the most conservative view of liquidity by only considering cash and cash equivalents to cover current liabilities, shows varying levels over the years. However, the ratios generally indicate that McDonald’s has maintained a reasonable level of cash on hand to meet its short-term obligations, though there were some periods with lower cash ratios.
Overall, the liquidity ratios suggest that McDonald’s has managed its liquidity well, ensuring that it has adequate resources to meet its short-term obligations and maintain financial stability.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The cash conversion cycle of McDonald’s Corporation has exhibited fluctuations over the specified periods, ranging from negative 52.34 days to negative 7.19 days. A negative cash conversion cycle typically indicates efficient management of working capital, suggesting that McDonald's is able to collect cash from its customers before it needs to pay its suppliers.
The trend shows some variability, with the cycle falling into negative territory more often in recent periods. This may imply that McDonald's has been effectively managing its inventory, accounts receivable, and accounts payable to optimize cash flow and minimize the time it takes to convert its investments in raw materials into cash receipts.
Overall, a consistently negative cash conversion cycle demonstrates the company's ability to efficiently manage its liquidity and working capital, which is crucial for sustaining its operations and meeting financial obligations.