McDonald’s Corporation (MCD)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 80.03% | 81.27% | 81.18% | 81.72% | 79.19% |
| Operating profit margin | 45.19% | 45.69% | 40.42% | 44.59% | 38.13% |
| Pretax margin | 39.91% | 41.27% | 33.76% | 39.31% | 31.97% |
| Net profit margin | 31.72% | 33.22% | 26.65% | 32.49% | 24.63% |
Based on the provided data, McDonald's Corporation has shown a consistent improvement in its gross profit margin over the years, with a slight decrease in 2024 compared to the previous year. The gross profit margin increased from 79.19% in 2020 to 81.27% in 2023 before dropping to 80.03% in 2024.
In terms of operating profit margin, McDonald's experienced significant fluctuations but generally showed an increasing trend, reaching 45.19% in 2024, up from 38.13% in 2020. This indicates that the company has been able to control its operating expenses more effectively over the years.
The pretax margin also increased consistently from 31.97% in 2020 to 41.27% in 2023, but dipped slightly to 39.91% in 2024. This implies that McDonald's has been able to generate higher earnings before taxes relative to its revenue.
Moreover, the net profit margin, which represents the bottom line profitability, improved from 24.63% in 2020 to 33.22% in 2023, before decreasing marginally to 31.72% in 2024. This shows that McDonald's has effectively managed its costs and expenses to enhance its net profitability over the years.
Overall, McDonald's Corporation has exhibited strong profitability performance based on the analysis of its gross profit margin, operating profit margin, pretax margin, and net profit margin, showcasing efficient cost management and revenue generation strategies.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 21.22% | 20.74% | 18.58% | 19.23% | 13.92% |
| Return on assets (ROA) | 14.90% | 15.08% | 12.25% | 14.01% | 8.99% |
| Return on total capital | 34.22% | 36.62% | 30.21% | 33.25% | 26.88% |
| Return on equity (ROE) | — | — | — | — | — |
Based on the provided data, we can observe an improving trend in McDonald’s profitability ratios over the years.
1. Operating Return on Assets (Operating ROA): This ratio indicates the company's operating profitability relative to its total assets. McDonald’s Operating ROA has consistently increased from 13.92% in 2020 to 21.22% in 2024. This suggests that the company has been effectively utilizing its assets to generate operating income.
2. Return on Assets (ROA): The ROA measures overall profitability by evaluating how efficiently the company is utilizing its assets to generate profit. McDonald’s ROA has also shown an upward trend, increasing from 8.99% in 2020 to 14.90% in 2024. This indicates improved efficiency in generating profit from its total assets.
3. Return on Total Capital: This ratio reflects the company’s ability to generate profit from both equity and debt capital invested in the business. The Return on Total Capital for McDonald’s has increased steadily from 26.88% in 2020 to 34.22% in 2024, indicating effective management of both equity and debt to generate profits.
4. Return on Equity (ROE): Unfortunately, the ROE data is missing for all years provided, so we are unable to assess the company’s profitability specifically in relation to shareholders’ equity.
Overall, the increasing trend in Operating ROA, ROA, and Return on Total Capital indicates that McDonald’s has been gradually improving its profitability and efficiency in utilizing its assets and capital over the years, which is a positive sign for the company's financial performance.