Microsoft Excel LibreOffice Calc

McDonald’s Corp. (MCD)


Analysis of Debt

Advanced level


Total Debt (Carrying Amount)

McDonald’s Corp., balance sheet: debt

US$ in thousands

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Current maturities of long-term debt —  —  77,200  —  — 
Long-term debt, excluding current maturities 31,075,300  29,536,400  25,878,500  24,122,100  14,989,700 
Total debt obligations (carrying amount) 31,075,300  29,536,400  25,955,700  24,122,100  14,989,700 

Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-24).

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.’s total debt increased from 2016 to 2017 and from 2017 to 2018.

Total Debt (Fair Value)

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Dec 31, 2018
Selected Financial Data (US$ in thousands)
Total debt obligations (fair value) 31,700,000 
Financial Ratio
Debt, fair value to carrying amount ratio 1.02

Based on: 10-K (filing date: 2019-02-22).


Weighted-average Interest Rate on Debt

Weighted-average effective interest rate on debt obligations: 3.15%

Interest Rate Debt Amount1 Interest Rate × Debt Amount Weighted-average Interest Rate2
4.00% 18,075,800  723,032 
3.40% 1,349,900  45,897 
1.60% 8,069,100  129,106 
0.00% 1,264,100  — 
5.30% 952,300  50,472 
3.10% 732,000  22,692 
2.90% 114,000  3,306 
0.30% 414,900  1,245 
2.60% 244,200  6,349 
Total 31,216,300  982,098 
3.15%

Based on: 10-K (filing date: 2019-02-22).

1 US$ in thousands

2 Weighted-average interest rate = 100 × 982,098 ÷ 31,216,300 = 3.15%


Interest Costs Incurred

McDonald’s Corp., interest costs incurred

US$ in thousands

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Interest expense 981,200  921,300  884,800  638,300  570,500 
Capitalized interest 5,600  5,300  7,100  9,400  14,700 
Interest costs incurred 986,800  926,600  891,900  647,700  585,200 

Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-24).

Debt item Description The company
Interest expense Amount of the cost of borrowed funds accounted for as interest expense for debt. McDonald’s Corp.’s interest expense increased from 2016 to 2017 and from 2017 to 2018.
Capitalized interest Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred. McDonald’s Corp.’s capitalized interest decreased from 2016 to 2017 but then slightly increased from 2017 to 2018.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. McDonald’s Corp.’s interest costs incurred increased from 2016 to 2017 and from 2017 to 2018.

Adjusted Interest Coverage Ratio

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (US$ in thousands)
Net income 5,924,300  5,192,300  4,686,500  4,529,300  4,757,800 
Add: Income tax expense 1,891,800  3,381,200  2,179,500  2,026,400  2,614,200 
Add: Interest expense, net of capitalized interest 981,200  921,300  884,800  638,300  570,500 
Earnings before interest and tax (EBIT) 8,797,300  9,494,800  7,750,800  7,194,000  7,942,500 
 
Interest costs incurred 986,800  926,600  891,900  647,700  585,200 
Financial Ratio With and Without Capitalized Interest
Interest coverage ratio (without capitalized interest)1 8.97 10.31 8.76 11.27 13.92
Adjusted interest coverage ratio (with capitalized interest)2 8.91 10.25 8.69 11.11 13.57

Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-24).

2018 Calculations

1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of capitalized interest
= 8,797,300 ÷ 981,200 = 8.97

2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 8,797,300 ÷ 986,800 = 8.91


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.’s adjusted interest coverage ratio improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018 not reaching 2016 level.