McDonald’s Corporation (MCD)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	11,850,000	11,883,000	9,032,400	10,313,700	7,358,800
Interest expense	US$ in thousands	1,506,000	1,361,000	1,207,000	1,185,800	1,218,100
Interest coverage		7.87	8.73	7.48	8.70	6.04

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $11,850,000K ÷ $1,506,000K
= 7.87

The interest coverage ratio for McDonald's Corporation has shown a positive trend over the past five years, starting at 6.04 in December 31, 2020, and gradually increasing to 8.70 in December 31, 2021, 7.48 in December 31, 2022, 8.73 in December 31, 2023, and finally settling at 7.87 in December 31, 2024.

This indicates that the company's ability to cover its interest expenses has generally improved over the years. A higher interest coverage ratio signifies that McDonald's has sufficient earnings to cover its interest payments comfortably, which is a positive indicator of financial health and stability.

However, it is noteworthy that there was a slight dip in the interest coverage ratio in 2022, although it recovered and continued to be relatively stable in the subsequent years. Overall, the trend demonstrates McDonald's Corporation's ability to effectively manage its debt obligations and generate enough operating income to cover its interest expenses.