McDonald’s Corporation (MCD)

Interest coverage

		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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	11,849,000	11,807,200	11,847,400	12,066,300	11,883,000	11,669,600	11,247,800	9,800,600	9,032,400	8,774,000	8,916,700	9,889,500	10,313,700	10,049,200	9,591,300	7,886,600	7,358,800	7,529,700	7,435,300	8,759,500
Interest expense (ttm)	US$ in thousands	1,506,000	1,486,200	1,446,200	1,403,200	1,361,200	1,323,900	1,289,100	1,249,700	1,207,000	1,179,700	1,167,200	1,173,100	1,185,800	1,199,100	1,215,500	1,238,100	1,218,100	1,192,200	1,162,700	1,127,800
Interest coverage		7.87	7.94	8.19	8.60	8.73	8.81	8.73	7.84	7.48	7.44	7.64	8.43	8.70	8.38	7.89	6.37	6.04	6.32	6.39	7.77

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $11,849,000K ÷ $1,506,000K
= 7.87

The interest coverage ratio for McDonald's Corporation has shown fluctuating trends over the years, indicating the company's ability to meet its interest obligations.

From March 31, 2020, to December 31, 2024, the interest coverage ratio ranged from 6.04 to 8.81, peaking in September 30, 2023. This suggests that McDonald's has generally been able to comfortably cover its interest expenses with its operating income during this period.

While the ratio experienced some fluctuations, it remained above 1, indicating that the company's operating income was always sufficient to cover its interest expenses. A higher interest coverage ratio is generally preferable as it signifies a stronger ability to meet interest payments from operating income.

Overall, the interest coverage ratio for McDonald's Corporation demonstrates a consistent ability to manage its interest obligations effectively and indicates stability in its financial health during the period under review.