McDonald’s Corp. (NYSE:MCD)

The analysis of the quarterly financial data indicates several notable trends regarding the liability and equity structure.

Short-term borrowings and current maturities of long-term debt

This category exhibited fluctuations with significant increases observed in mid-2020, peaking at 8.18%, then generally declining with intermittent minor spikes, ultimately declining to a very low level of 0.14% by early 2025, indicating reduced reliance on short-term debt maturities over time.

Accounts payable

Accounts payable as a proportion of total liabilities and shareholders’ equity have remained relatively stable but showed a slight increasing trend from around 1.3% in early 2020 to a maximum of 1.96% in late 2021, before fluctuating around the 1.5% to 1.8% range subsequently.

Dividends payable

Dividends payable was mostly absent throughout early periods but emerged moderately at 1.95% in late 2021 and again showed an increase to 2.25% in early 2024, suggesting periodic accumulation of dividend liabilities.

Current lease liability

The current lease liability remained stable throughout the periods, ranging narrowly between approximately 1.15% and 1.42%, indicating consistent lease-related current liabilities relative to total obligations.

Income taxes

Income taxes as a percentage fluctuated notably, peaking at 1.53% in early 2023 and showing a volatile pattern over the quarters, indicative of variable tax liabilities with no clear long-term upward or downward trend.

Other taxes

Other taxes percentages remained relatively stable, oscillating narrowly around 0.4-0.5%, reflecting steady non-income tax obligations.

Accrued interest

Accrued interest showed minor fluctuations with a general range between 0.59% and 0.87%, suggesting steady interest expense accruals relative to total liabilities and equity.

Accrued payroll and other liabilities

This category displayed moderate variability, rising from about 1.5% in early 2020 to a peak of 3.22% in early 2022, then settling mostly between 2.0% and 2.6%, indicating fluctuating short-term payroll and other accrued liabilities, possibly affected by operational changes.

Current liabilities (aggregate)

Current liabilities as a whole showed significant volatility, surging to 14.51% in mid-2020, then declining to a range of 7%-9%, with some spikes notably in late 2023 and early 2025, reflecting varying working capital requirements and short-term obligations.

Long-term debt, excluding current maturities

Long-term debt remained the dominant component of the capital structure, consistently around 65%-75%, with slight dips and recoveries but no sustained directional change, illustrating stable long-term debt levels relative to total financing sources.

Long-term lease liability

Long-term lease liabilities were steady within a narrow band between 22.67% and 25.66% across the period, indicating consistent long-term lease obligations.

Long-term income taxes

Long-term income tax liabilities demonstrated a clear declining trend from above 4% in early 2020 to below 1% in several later quarters, suggesting efficient management or reduction of deferred income tax liabilities over time.

Deferred revenues and initial franchise fees

This item showed slight increasing tendencies, mostly fluctuating near 1.3% to 1.6%, suggesting steady deferred revenue streams.

Other long-term liabilities

Other long-term liabilities remained relatively stable around 1.3%-2.1%, with a slight decreasing trend in the later quarters.

Deferred income taxes

Deferred income taxes displayed modest fluctuations, with a tendency to decline over time but showing some rebounds, generally oscillating between 2% and 4.5%, reflecting timing differences in tax expense recognition.

Long-term liabilities (aggregate)

Long-term liabilities combined remained relatively stable near the 100% mark with minor decreases after peaking early in the data period, suggesting relatively steady long-term obligations relative to total liabilities and equity.

Total liabilities

Total liabilities as a percentage of total liabilities and shareholders’ equity decreased marginally from approximately 118% in early 2020 to around 106% by early 2025, indicating a slight reduction in overall liabilities relative to total capitalization.

Shareholders’ equity (deficit)

Shareholders’ equity remained negative throughout the periods, though the deficit narrowed gradually from about -18.38% in early 2020 to approximately -6.13% in early 2025, reflecting an improving equity position despite remaining in deficit, which may be partly due to the effects of treasury stock and accumulated losses.

Common stock in treasury at cost

The treasury stock component showed a consistent negative contribution fluctuating around -130% to -145%, evidencing significant repurchases or holdings of treasury stock that contribute substantially to the negative equity balance.

Retained earnings

Retained earnings demonstrated a steady upward trend from roughly 105% to over 120% across the period, indicating ongoing accumulation of earnings despite the overall negative equity, contributing positively to the company’s net worth.

Additional paid-in capital

Additional paid-in capital gradually increased from around 15.25% to near 17%, signaling incremental capital inflows or equity contributions over time.

Accumulated other comprehensive loss

Accumulated other comprehensive loss improved modestly, decreasing in absolute value from about -5.93% to approximately -4.54%, suggesting slightly reduced unrealized losses or other comprehensive loss items.

In summary, the company’s liabilities remain substantial relative to shareholders’ equity, with long-term debt and lease liabilities comprising the bulk of financial obligations. Over the analyzed periods, the equity deficit has been steadily diminishing, partially due to increasing retained earnings and paid-in capital. The trends in current liabilities and accrued items reflect some variability, potentially influenced by operational and financial management decisions. Overall, the company shows signs of gradually strengthening equity amid a consistently leveraged capital structure.