Profitability Analysis

Difficulty level: Basic


Ratios (Summary)

McDonald's Corp., profitability ratios

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Return on Sales
Gross profit margin 38.79% 39.24% 39.57% 40.03% 38.65%
Operating profit margin 31.18% 31.21% 31.58% 31.04% 30.08%
Net profit margin 19.87% 19.82% 20.38% 20.55% 20.01%
Return on Investment
Return on equity (ROE) 34.89% 35.73% 38.24% 33.80% 32.43%
Return on assets (ROA) 15.25% 15.44% 16.68% 15.47% 15.06%

Source: Based on data from McDonald's Corp. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. McDonald's Corp.'s gross profit margin deteriorated from 2011 to 2012 and from 2012 to 2013.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. McDonald's Corp.'s operating profit margin deteriorated from 2011 to 2012 and from 2012 to 2013.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. McDonald's Corp.'s net profit margin deteriorated from 2011 to 2012 but then slightly improved from 2012 to 2013.
ROE A profitability ratio calculated as net income divided by shareholders' equity. McDonald's Corp.'s ROE deteriorated from 2011 to 2012 and from 2012 to 2013.
ROA A profitability ratio calculated as net income divided by total assets. McDonald's Corp.'s ROA deteriorated from 2011 to 2012 and from 2012 to 2013.

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Gross Profit Margin

McDonald's Corp., gross profit margin calculation

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in thousands)
Gross margin 10,902,700  10,816,300  10,686,600  9,637,300  8,791,800 
Revenues 28,105,700  27,567,000  27,006,000  24,074,600  22,744,700 
Ratio
Gross profit margin1 38.79% 39.24% 39.57% 40.03% 38.65%

Source: Based on data from McDonald's Corp. Annual Reports

2013 Calculations

1 Gross profit margin = 100 × Gross margin ÷ Revenues
= 100 × 10,902,700 ÷ 28,105,700 = 38.79%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. McDonald's Corp.'s gross profit margin deteriorated from 2011 to 2012 and from 2012 to 2013.

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Operating Profit Margin

McDonald's Corp., operating profit margin calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in thousands)
Operating income 8,764,300  8,604,600  8,529,700  7,473,100  6,841,000 
Revenues 28,105,700  27,567,000  27,006,000  24,074,600  22,744,700 
Ratio
Operating profit margin1 31.18% 31.21% 31.58% 31.04% 30.08%
Benchmarks
Operating Profit Margin, Competitors
Starbucks Corp. -2.19% 15.02% 14.77% 13.26% 5.75%
YUM! Brands Inc. 13.74% 16.83% 14.38% 15.60% 14.67%
Operating Profit Margin, Sector
Restaurants & Bars 18.25% 23.66% 23.52% 23.11% 20.74%
Operating Profit Margin, Industry
Consumer Services 8.05% 7.78% 8.02% 7.66% 6.32%

Source: Based on data from McDonald's Corp. Annual Reports

2013 Calculations

1 Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 8,764,300 ÷ 28,105,700 = 31.18%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. McDonald's Corp.'s operating profit margin deteriorated from 2011 to 2012 and from 2012 to 2013.

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Net Profit Margin

McDonald's Corp., net profit margin calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in thousands)
Net income 5,585,900  5,464,800  5,503,100  4,946,300  4,551,000 
Revenues 28,105,700  27,567,000  27,006,000  24,074,600  22,744,700 
Ratio
Net profit margin1 19.87% 19.82% 20.38% 20.55% 20.01%
Benchmarks
Net Profit Margin, Competitors
Starbucks Corp. 0.06% 10.40% 10.65% 8.83% 4.00%
YUM! Brands Inc. 8.34% 11.71% 10.45% 10.21% 9.88%
Net Profit Margin, Sector
Restaurants & Bars 11.92% 15.50% 15.72% 15.28% 13.87%
Net Profit Margin, Industry
Consumer Services 5.14% 4.59% 4.87% 4.54% 3.85%

Source: Based on data from McDonald's Corp. Annual Reports

2013 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 5,585,900 ÷ 28,105,700 = 19.87%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. McDonald's Corp.'s net profit margin deteriorated from 2011 to 2012 but then slightly improved from 2012 to 2013.

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Return on Equity (ROE)

McDonald's Corp., ROE calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in thousands)
Net income 5,585,900  5,464,800  5,503,100  4,946,300  4,551,000 
Shareholders’ equity 16,009,700  15,293,600  14,390,200  14,634,200  14,033,900 
Ratio
ROE1 34.89% 35.73% 38.24% 33.80% 32.43%
Benchmarks
ROE, Competitors
Starbucks Corp. 0.19% 27.09% 28.41% 25.73% 12.83%
YUM! Brands Inc. 50.37% 74.14% 72.35% 73.48% 104.49%
ROE, Sector
Restaurants & Bars 29.51% 37.44% 39.17% 35.45% 33.21%
ROE, Industry
Consumer Services 17.83% 15.66% 15.82% 13.88% 12.34%

Source: Based on data from McDonald's Corp. Annual Reports

2013 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 5,585,900 ÷ 16,009,700 = 34.89%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. McDonald's Corp.'s ROE deteriorated from 2011 to 2012 and from 2012 to 2013.

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Return on Assets (ROA)

McDonald's Corp., ROA calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in thousands)
Net income 5,585,900  5,464,800  5,503,100  4,946,300  4,551,000 
Total assets 36,626,300  35,386,500  32,989,900  31,975,200  30,224,900 
Ratio
ROA1 15.25% 15.44% 16.68% 15.47% 15.06%
Benchmarks
ROA, Competitors
Starbucks Corp. 0.07% 16.84% 16.92% 14.81% 7.01%
YUM! Brands Inc. 12.55% 17.72% 14.93% 13.92% 14.98%
ROA, Sector
Restaurants & Bars 11.76% 16.05% 16.40% 15.10% 14.00%
ROA, Industry
Consumer Services 7.20% 6.41% 6.69% 6.35% 5.53%

Source: Based on data from McDonald's Corp. Annual Reports

2013 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 5,585,900 ÷ 36,626,300 = 15.25%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. McDonald's Corp.'s ROA deteriorated from 2011 to 2012 and from 2012 to 2013.

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