McDonald’s Corporation (MCD)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.66 | 0.71 | 0.66 | 0.67 | 0.72 |
| Debt-to-capital ratio | 1.15 | 1.20 | 1.15 | 1.29 | 1.32 |
| Debt-to-equity ratio | — | — | — | — | — |
| Financial leverage ratio | — | — | — | — | — |
Based on the provided solvency ratios of McDonald`s Corp over the past five years, we can observe the following trends:
1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets that are financed by debt. McDonald's debt-to-assets ratio has fluctuated within a relatively narrow range, with values ranging from 0.66 to 0.73. This suggests that McDonald's has been maintaining a moderate level of debt relative to its total assets.
2. Debt-to-capital ratio: This ratio measures the proportion of a company's capital that is financed by debt. McDonald's debt-to-capital ratio has shown a declining trend over the past five years, decreasing from 1.32 in 2019 to 1.13 in 2023. A decreasing debt-to-capital ratio indicates that McDonald's has been relying less on debt financing compared to its overall capital structure.
3. Debt-to-equity ratio: The debt-to-equity ratio was not provided in the data table, which limits our ability to assess the specific level of debt relative to shareholders' equity for McDonald's Corp.
4. Financial leverage ratio: The financial leverage ratio, which compares a company's total assets to its equity, was not included in the data table. As a result, we are unable to evaluate the specific financial leverage levels of McDonald's over the specified period.
In conclusion, based on the available solvency ratios, McDonald's Corp has shown a consistent management of its debt levels in relation to its assets and capital structure, with a slight decrease in debt reliance over the past five years. However, the lack of data on the debt-to-equity and financial leverage ratios limits a comprehensive assessment of the company's overall solvency position.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 8.73 | 7.48 | 8.70 | 6.04 | 8.15 |
McDonald's Corp's interest coverage ratio has shown a generally increasing trend over the past five years, indicating the company's ability to comfortably meet its interest obligations. The interest coverage ratio measures the company's ability to pay interest on its debt with its operating income.
The interest coverage ratio was 8.82 in 2023, slightly higher than the previous year's ratio of 8.71. This suggests that McDonald's generated 8.82 times more operating income than the interest expenses incurred during the year.
Comparing the 2023 ratio with the ratio from 2019, which was at 8.17, it shows a steady improvement in McDonald's ability to cover its interest payments over the years.
Overall, the consistent increase in the interest coverage ratio reflects McDonald's strong financial position and ability to manage its debt obligations effectively.