McDonald’s Corp. (NYSE:MCD)

An examination of the financial information reveals notable adjustments to total assets and shareholders’ equity over the five-year period. These adjustments consistently relate to the removal of goodwill, impacting the reported financial position of the entity.

Total Assets

Reported total assets experienced fluctuations throughout the period, beginning at US$53,854 million in 2021, decreasing to US$50,436 million in 2022, and then increasing to US$56,147 million in 2023. A slight decrease was observed in 2024 to US$55,182 million, followed by an increase to US$59,515 million in 2025. The adjusted total assets, reflecting the removal of goodwill, consistently presented lower values than the reported figures. Adjusted total assets followed a similar trend, starting at US$51,072 million in 2021, declining to US$47,535 million in 2022, rising to US$53,106 million in 2023, decreasing to US$52,037 million in 2024, and finally increasing to US$56,161 million in 2025. The difference between reported and adjusted total assets remained relatively stable across the period.

Shareholders’ Equity (Deficit)

Reported shareholders’ equity remained in a deficit position throughout the period, starting at negative US$4,601 million in 2021 and reaching a maximum deficit of negative US$6,003 million in 2022. The deficit lessened to negative US$4,707 million in 2023 and further improved to negative US$3,797 million in 2024, before reaching negative US$1,791 million in 2025. The adjusted shareholders’ equity (deficit) consistently showed a more negative position than the reported equity. The adjusted equity began at negative US$7,384 million in 2021, reached a maximum deficit of negative US$8,904 million in 2022, and then improved to negative US$7,747 million in 2023, negative US$6,942 million in 2024, and negative US$5,145 million in 2025. The magnitude of the adjustment to shareholders’ equity remained consistent throughout the period.

The consistent difference between reported and adjusted figures indicates a systematic removal of goodwill from the balance sheet. The adjustments to both total assets and shareholders’ equity suggest that the entity has reassessed the value of previously recorded goodwill, resulting in impairments or write-downs. The trend in adjusted shareholders’ equity suggests a slower recovery from the deficit position compared to the reported equity, highlighting the impact of goodwill adjustments on the overall equity position.

The financial metrics demonstrate a consistent pattern following the adjustment for goodwill. Specifically, adjusted ratios generally exhibit higher values compared to their reported counterparts, suggesting a notable impact of goodwill on the company’s financial performance as traditionally measured.

Total Asset Turnover

Reported total asset turnover fluctuated between 0.43 and 0.47 over the observed period. However, the adjusted total asset turnover consistently exceeded the reported value, ranging from 0.45 to 0.50. This indicates that removing goodwill from total assets results in a more efficient utilization of operating assets, as measured by revenue generated per dollar of assets. A slight upward trend is observed in the adjusted ratio from 2021 to 2024, followed by a minor decrease in 2025.

Return on Assets

Reported Return on Assets (ROA) showed variability, moving from 14.01% in 2021 to 12.25% in 2022, then increasing to 15.08% in 2023, and remaining relatively stable at approximately 14.5% through 2025. The adjusted ROA consistently presented higher values, ranging from 14.77% to 15.95%. This suggests that the inclusion of goodwill in the asset base suppresses the reported ROA. The adjusted ROA also demonstrates a similar trend to the reported ROA, with an increase from 2021 to 2023, followed by a slight decline.

The absence of reported and adjusted values for financial leverage and Return on Equity limits a comprehensive assessment of the impact of goodwill removal on these specific metrics. However, the observed differences in total asset turnover and ROA strongly suggest that goodwill significantly influences the company’s reported financial performance. The consistent increase in adjusted ratios relative to reported ratios highlights the importance of considering the impact of intangible assets, such as goodwill, when evaluating the company’s operational efficiency and profitability.

An examination of the financial information reveals trends in both total asset values and associated turnover ratios over a five-year period. Reported total assets experienced a decrease between 2021 and 2022, followed by increases in subsequent years, culminating in a value of US$59,515 million in 2025. Adjusted total assets mirrored this pattern, though the magnitudes of change differed slightly, reaching US$56,161 million in 2025.

Reported Total Asset Turnover

The reported total asset turnover ratio exhibited a generally stable pattern, fluctuating between 0.43 and 0.47 over the period. An initial increase from 0.43 in 2021 to 0.46 in 2022 was followed by a slight decrease to 0.45 in 2023. The ratio then rose to 0.47 in 2024 before returning to 0.45 in 2025. This suggests a consistent, but not significantly improving, efficiency in generating sales from reported assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio demonstrated a more pronounced upward trend. Starting at 0.45 in 2021, it increased to 0.49 in 2022, then settled at 0.48 in 2023. A further increase to 0.50 was observed in 2024, followed by a slight decline to 0.48 in 2025. The adjusted ratio consistently exceeded the reported ratio throughout the period, indicating that excluding certain asset components results in a higher measure of asset efficiency.

The divergence between reported and adjusted total asset turnover suggests that the components excluded in the adjusted calculation—likely including goodwill and intangible assets—are impacting the overall reported turnover. The relatively stable reported turnover, contrasted with the increasing adjusted turnover, implies that the efficiency of core operating assets is improving, while the impact of non-operating assets remains a consistent factor. The slight decrease in both ratios in 2025 warrants further investigation to determine if this represents a temporary fluctuation or the beginning of a new trend.

An examination of the financial information reveals trends in total assets and shareholders’ equity, and consequently, in financial leverage. Reported total assets decreased from 2021 to 2022, then increased through 2023, followed by a slight decrease in 2024, and a further increase in 2025. Adjusted total assets mirrored this pattern, exhibiting a similar decrease in 2022, increase through 2023, decrease in 2024, and increase in 2025, though the magnitudes of the changes differed.

Shareholders’ equity, both reported and adjusted, consistently reflected a deficit position throughout the period. The reported deficit lessened from 2022 to 2025, while the adjusted deficit also showed a decreasing trend, though at a slower pace. The adjusted shareholders’ equity deficit was consistently larger in absolute value than the reported shareholders’ equity deficit across all years.

Adjusted Total Assets Trend

Adjusted total assets began at US$51,072 million in 2021, decreased to US$47,535 million in 2022, then increased to US$53,106 million in 2023. A slight decrease to US$52,037 million was observed in 2024, followed by an increase to US$56,161 million in 2025. This suggests fluctuations in asset valuation after adjustments, potentially related to intangible asset or goodwill considerations.

Shareholders’ Equity Deficit

The reported shareholders’ equity deficit improved from -US$6,003 million in 2022 to -US$1,791 million in 2025. The adjusted shareholders’ equity deficit also improved, moving from -US$8,904 million in 2022 to -US$5,145 million in 2025. The consistent deficit indicates ongoing challenges in generating and retaining equity, but the trend suggests a gradual improvement in this area.

Without the calculated financial leverage ratios, a definitive assessment of the company’s risk profile is limited. However, the decreasing deficits in shareholders’ equity, coupled with the fluctuating adjusted total assets, suggest a potential for changing leverage dynamics over the observed period. Further analysis incorporating the calculated ratios is necessary to fully understand the implications of these trends.

Shareholders’ equity, both reported and adjusted, demonstrates considerable fluctuation over the five-year period. A consistent pattern of negative equity is observed, indicating a deficit position for the company throughout the analyzed timeframe. The adjusted shareholders’ equity consistently reports a larger deficit than the reported shareholders’ equity, suggesting the adjustments made are decreasing the equity position.

Reported Shareholders’ Equity

Reported shareholders’ equity begins at a deficit of US$4,601 million in 2021, worsens to a deficit of US$6,003 million in 2022, improves to a deficit of US$4,707 million in 2023, further improves to a deficit of US$3,797 million in 2024, and continues to improve to a deficit of US$1,791 million in 2025. This indicates a general trend toward reducing the equity deficit, although a deficit remains.

Adjusted Shareholders’ Equity

Adjusted shareholders’ equity starts at a deficit of US$7,384 million in 2021, declines to a deficit of US$8,904 million in 2022, recovers to a deficit of US$7,747 million in 2023, improves to a deficit of US$6,942 million in 2024, and further improves to a deficit of US$5,145 million in 2025. Similar to reported equity, the adjusted equity also shows a trend of decreasing the deficit, but remains negative throughout the period.

Relationship between Reported and Adjusted Equity

The difference between reported and adjusted shareholders’ equity widens in 2022, then narrows consistently from 2023 through 2025. This suggests that the impact of the adjustments is lessening over time, or that the reported equity is improving at a faster rate than the adjustments are increasing the deficit.

Return on Equity (ROE)

Values for both reported and adjusted ROE are not provided, precluding any analysis of profitability relative to equity. Without ROE figures, it is impossible to assess the effectiveness of equity utilization or the impact of the equity trends on overall financial performance. The absence of ROE values limits the scope of this analysis.

The consistent negative equity positions warrant further investigation into the nature of the adjustments being made and the underlying factors contributing to the equity deficits. The improving trend in both reported and adjusted equity from 2022 to 2025 is a positive sign, but continued monitoring is necessary to determine if this trend is sustainable.

The analysis reveals a consistent pattern between reported and adjusted return on assets (ROA) over the five-year period. Both metrics demonstrate a generally stable performance with fluctuations occurring between years. A notable difference exists between the reported and adjusted ROA values, with the adjusted ROA consistently exceeding the reported ROA throughout the observed timeframe.

Total Assets

Reported total assets experienced a decrease between 2021 and 2022, followed by increases in 2023, 2024, and 2025. The largest increase occurred between 2024 and 2025. Adjusted total assets mirrored this trend, exhibiting a similar decrease in 2022 and subsequent increases, though the magnitude of the changes differed slightly. The difference between reported and adjusted total assets narrowed from 2022 to 2025.

Reported Return on Assets (ROA)

Reported ROA decreased from 14.01% in 2021 to 12.25% in 2022, then increased to 15.08% in 2023. It remained relatively stable at 14.90% in 2024 before decreasing slightly to 14.39% in 2025. This suggests a period of volatility followed by stabilization.

Adjusted Return on Assets (ROA)

Adjusted ROA followed a similar pattern to the reported ROA, declining from 14.77% in 2021 to 13.00% in 2022, increasing to 15.95% in 2023, and stabilizing at 15.80% in 2024 before a slight decrease to 15.25% in 2025. The adjusted ROA consistently presented a higher value than the reported ROA each year. The largest difference between the two metrics occurred in 2023.

The consistent difference between reported and adjusted ROA suggests that the adjustments made to total assets have a material impact on the overall profitability assessment. The upward trend in both reported and adjusted ROA from 2022 to 2023 indicates improved asset utilization and profitability during that period. The slight decline in both metrics in 2025 warrants further investigation to determine the underlying causes.