McDonald’s Financial Ratios

LIQUIDITY RATIOS
2015 2014 2013
Current Ratio 2.52 2.39 3.91
Acid-Test Ratio 1.64 1.59 2.94

The Liquidity Ratios show that McDonald’s has enough short-term or

current assets and quick assets to be able to pay its current obligations. The
decrease in these ratio is caused by the increase in current liabilities, although
the current assets also increased.

LEVERAGE RATIOS
2015 2014 2013
Debt Ratio 0.48 0.47 0.43
Debt-to-Equity Ratio 0.98 0.88 0.75

The Leverage Ratios show that McDonald’s has almost twice as many
assets as its liabilities, therefore its assets is sufficient to pay off its debts. In
2015, Debt-to-Equity ratio increased to 0.98, which means that creditors and
investors almost have an equal stake in McDonald’s assets. These increases
can be attributable to the increase in liabilities.

PROFITABILITY RATIOS
2015 2014 2013
Gross Profit Margin 0.42 0.46 0.47
Net Profit Margin 0.16 0.17 0.19
Return on Total Assets 0.07 0.08 0.10
Return on Equity 0.10 0.10 0.12

The Profitability Ratios have all decreased by 2015 by only 0.01 to

0.05. Gross Profit Margin shows that the profit left to spend for other
expenses after cost of goods sold and cost of sales have been deducted have
decreased. In 2015, 42% of McDonald’s sales are left to spend for other
expenses. Net Profit Margin shows that there was a decrease in the net
profit generated from sales. In 2015, only 16% of McDonald’s sales are left
as its net profit. Return on Total Assets shows that there was a decrease in
the net income produced by or generated from McDonald’s assets. Return on
Equity decreased and stood at 0.10 in 2014 and 2015.

ACTIVITY RATIOS
2015 2014 2013
Inventory Turnover
Ratio 0.75 0.60 0.56
Accounts Receivables
Turnover 3.43 3.09 3.04
Total Asset Turnover 0.35 0.32 0.31

Inventory Turnover Ratio increased from 0.56 in 2013, 0.60 in 2014 to

0.75 in 2015, which indicates that it is generating more sales from selling
inventories as compared to the previous years and there is efficient
management of inventories. Accounts Receivable Turnover had a significant
increase, from 3.04 in 2013, to 3.43 in 2015, which indicates that the company
is receiving credit sales more as compared to previous years. The increase in
Total Asset Turnover indicates that McDonald’s is using its assets more
efficiently as compared to the previous years.

GROWTH RATIOS
2015 2014 2013
Sales Growth 0.11 0.02
Net Income Growth 0.03 -0.08
Return on Equity 0.10 0.10 0.12

INVESTORS’ RATIOS
2015 2014 2013
Earnings per Share 1.36 1.31 1.70
Price Earnings Ratio