McDonald’s Corp. (NYSE:MCD)

The asset composition of the entity demonstrates significant shifts over the five-year period. A notable trend is the decreasing proportion of current assets relative to total assets, falling from 13.27% in 2021 to 6.99% in 2025. Conversely, long-term assets have increased as a percentage of total assets, rising from 86.73% in 2021 to 93.01% in 2025. Within these broad categories, several specific items exhibit noteworthy changes.

Liquidity and Current Assets

Cash and equivalents experienced a substantial decline, decreasing from 8.74% of total assets in 2021 to 1.30% in 2025. Accounts and notes receivable remained relatively stable, fluctuating between 3.48% and 4.43% throughout the period. Prepaid expenses and other current assets showed an initial increase, peaking at 1.54% in 2023, before decreasing to 1.45% in 2025. The overall reduction in current assets suggests a potential shift in working capital management or a change in the entity’s operational cycle.

Long-Term Investments and Intangibles

Investments in and advances to affiliates increased from 2.23% in 2021 to 4.74% in 2025, indicating a growing allocation of capital to these ventures. Goodwill remained a consistent component of total assets, fluctuating between 5.17% and 5.75%. The ‘Miscellaneous’ asset category experienced a consistent increase, rising from 8.26% to 10.64% over the period, warranting further investigation to understand its composition. Other assets also showed a consistent increase, from 15.66% to 21.01%.

Lease Obligations

The operating lease right-of-use asset, net, decreased from 25.16% in 2021 to 20.90% in 2025. The finance lease right-of-use asset, net, was introduced in 2022 and grew to 3.64% of total assets by 2025. Combining both lease assets, net property and equipment, including finance lease right-of-use asset, increased from 45.90% in 2021 to 51.09% in 2025, representing a significant portion of the entity’s asset base.

Net Property, Plant, and Equipment

Net property and equipment exhibited some fluctuation, decreasing from 45.90% in 2021 to 44.36% in 2023, then increasing to 47.45% in 2025. This suggests ongoing investment in fixed assets, though the percentage of total assets varied. The inclusion of the finance lease right-of-use asset increased the overall proportion of property and equipment to 51.09% in 2025.

In summary, the entity’s asset base is becoming increasingly weighted towards long-term assets, particularly those related to lease obligations and property, plant, and equipment. The decline in current assets, especially cash and equivalents, requires further scrutiny to assess potential implications for short-term liquidity and operational flexibility.