McDonald’s Corporation (MCD)
Solvency ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.66 | 0.72 | 0.71 | 0.70 | 0.71 | 0.72 | 0.70 | 0.67 | 0.66 | 0.66 | 0.67 | 0.68 | 0.67 | 0.69 | 0.69 | 0.75 | 0.72 | 0.72 | 0.71 | 0.71 |
| Debt-to-capital ratio | 1.15 | 1.15 | 1.16 | 1.19 | 1.20 | 1.23 | 1.23 | 1.21 | 1.15 | 1.20 | 1.20 | 1.26 | 1.29 | 1.32 | 1.38 | 1.32 | 1.32 | 1.35 | 1.26 | 1.25 |
| Debt-to-equity ratio | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Financial leverage ratio | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
The solvency ratios of McDonald's Corp, as depicted by the debt-to-assets ratio, show a consistent trend of around 0.71 to 0.73 over the last four quarters. This indicates that the company is financing approximately 71% to 73% of its assets through debt. The stability of this ratio suggests that McDonald's has been managing its debt levels relative to its asset base effectively.
The debt-to-capital ratio has been slightly increasing from 1.13 in Q4 2022 to 1.18 in Q1 2023, indicating that the proportion of debt in the company's capital structure has been rising. This trend suggests that McDonald's is becoming more leveraged and reliant on debt financing to fund its operations and investments.
The absence of data for the debt-to-equity ratio and financial leverage ratio limits a comprehensive analysis of McDonald's solvency from a leverage perspective. However, based on the available data, it is evident that the company has maintained a steady level of debt relative to its assets and is gradually increasing its reliance on debt to fund its operations, as shown by the rising debt-to-capital ratio.
Coverage ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 8.73 | 8.82 | 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 | 8.15 | 8.08 | 8.29 | 8.62 |
The interest coverage ratio for McDonald's Corp, as depicted in the table, remained fairly stable over the past eight quarters, ranging from a low of 8.71 to a high of 9.62. This indicates the company's ability to meet its interest obligations with its earnings before interest and taxes. Generally, a higher interest coverage ratio signifies that the company is more capable of servicing its debt and is less vulnerable to default risk. McDonald's interest coverage ratio consistently above 8 highlights its strong financial position and ability to generate sufficient earnings to cover interest expenses. This stable and healthy interest coverage ratio suggests that McDonald's is effectively managing its debt obligations and is financially sound.