Stock Analysis on Net

McDonald’s Corp. (NYSE:MCD)

Analysis of Debt

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Total Debt (Carrying Amount)

McDonald’s Corp., balance sheet: debt

US$ in thousands

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Current maturities of long-term debt 2,243,600  59,100  —  —  77,200 
Long-term debt, excluding current maturities 35,196,800  34,118,100  31,075,300  29,536,400  25,878,500 
Total debt obligations (carrying amount) 37,440,400  34,177,200  31,075,300  29,536,400  25,955,700 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Debt item Description The company
Total debt obligations (carrying amount) Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. McDonald’s Corp. total debt increased from 2018 to 2019 and from 2019 to 2020.

Total Debt (Fair Value)

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Dec 31, 2020
Selected Financial Data (US$ in thousands)
Total debt obligations (fair value) 43,700,000 
Financial Ratio
Debt, fair value to carrying amount ratio 1.17

Based on: 10-K (reporting date: 2020-12-31).


Weighted-average Interest Rate on Debt

Weighted-average effective interest rate on debt obligations: 3.09%

Interest rate Debt amount1 Interest rate × Debt amount Weighted-average interest rate2
3.90% 22,734,500  886,646 
0.90% 1,150,000  10,350 
1.50% 9,453,900  141,809 
2.10% 366,500  7,697 
3.40% 845,100  28,733 
1.20% 230,800  2,770 
4.20% 1,156,400  48,569 
3.10% 784,900  24,332 
2.90% 121,100  3,512 
0.20% 451,900  904 
1.90% 265,700  5,048 
Total 37,560,800  1,160,368 
3.09%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in thousands

2 Weighted-average interest rate = 100 × 1,160,368 ÷ 37,560,800 = 3.09%


Interest Costs Incurred

McDonald’s Corp., interest costs incurred

US$ in thousands

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12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Interest expense 1,218,100  1,121,900  981,200  921,300  884,800 
Capitalized interest 6,000  7,400  5,600  5,300  7,100 
Interest costs incurred 1,224,100  1,129,300  986,800  926,600  891,900 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Debt item Description The company
Interest expense Amount of the cost of borrowed funds accounted for as interest expense for debt. McDonald’s Corp. interest expense increased from 2018 to 2019 and from 2019 to 2020.
Capitalized interest Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred. McDonald’s Corp. capitalized interest increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. McDonald’s Corp. interest costs incurred increased from 2018 to 2019 and from 2019 to 2020.

Adjusted Interest Coverage Ratio

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in thousands)
Net income 4,730,500  6,025,400  5,924,300  5,192,300  4,686,500 
Add: Income tax expense 1,410,200  1,992,700  1,891,800  3,381,200  2,179,500 
Add: Interest expense, net of capitalized interest 1,218,100  1,121,900  981,200  921,300  884,800 
Earnings before interest and tax (EBIT) 7,358,800  9,140,000  8,797,300  9,494,800  7,750,800 
 
Interest costs incurred 1,224,100  1,129,300  986,800  926,600  891,900 
Financial Ratio With and Without Capitalized Interest
Interest coverage ratio (without capitalized interest)1 6.04 8.15 8.97 10.31 8.76
Adjusted interest coverage ratio (with capitalized interest)2 6.01 8.09 8.91 10.25 8.69

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of capitalized interest
= 7,358,800 ÷ 1,218,100 = 6.04

2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 7,358,800 ÷ 1,224,100 = 6.01


Solvency ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). McDonald’s Corp. adjusted interest coverage ratio deteriorated from 2018 to 2019 and from 2019 to 2020.