McDonald’s Corp. (NYSE:MCD)

Debt to Capital

The debt to capital ratio exhibits a gradual downward trend over the observed period. Starting at 1.31 in the first quarter of 2020, it decreases steadily to 1.07 by the second quarter of 2025. This pattern indicates a progressive reduction in reliance on debt financing relative to capital, suggesting an improved capital structure and potentially enhanced financial stability.

Debt to Assets

This ratio shows moderate fluctuations but generally maintains a stable range between 0.66 and 0.78. Initially, the ratio decreases from 0.77 in the first quarter of 2020 to approximately 0.66 in the last quarter of 2021, indicating reduced leverage relative to total assets. Subsequently, the ratio oscillates around 0.70 with minor variations until the second quarter of 2025. The stability in this ratio suggests consistent asset management relative to debt obligations.

Interest Coverage

Interest coverage ratios are available starting from the third quarter of 2020 and show an increasing trend initially, rising from 6.04 to a peak of 8.82 around the third quarter of 2023. Following this peak, the ratio slightly declines but remains in a narrow band around 7.8 to 8.7 through to mid-2025. This indicates that the company's ability to cover interest expenses improved significantly during the period, enhancing financial health and easing interest burden concerns.

Summary of Trends

Overall, the data suggests a positive evolution in the company’s financial leverage position. The steady decrease in debt to capital ratio points to decreasing dependency on debt, while the relatively stable debt to assets ratio reflects consistent asset usage relative to debt. The improvement in interest coverage ratio highlights better earnings capacity in relation to interest expenses, which further supports the inference of strengthening financial metrics over time.

The analysis of the quarterly financial data reveals several notable trends in both total debt and shareholders’ equity over the observed periods.

Total debt

Total debt demonstrates a general fluctuation pattern with an overall slight upward trend from the beginning to the end of the period. Starting at approximately 39,153 million USD at March 31, 2020, total debt decreases initially, reaching a low near 33,989 million USD around March 31, 2022. Subsequently, debt levels increase steadily, peaking above 41,403 million USD in June 30, 2025. This pattern suggests a period of deleveraging during 2020–2022, followed by a consistent accumulation of debt through 2023 and into mid-2025.

Shareholders’ equity (deficit)

Shareholders’ equity remains in deficit throughout the timeline, indicating that liabilities exceed assets consistently. The deficit appears to narrow from -9,293 million USD in March 31, 2020, improving to approximately -4,601 million USD by December 31, 2021, signaling some recovery or reduction in net liabilities during this period. However, after December 2021, the deficit fluctuates, exhibiting minor worsening phases followed by partial recoveries. By mid-2025, the deficit decreases further to around -2,760 million USD, representing a moderate trend towards reduced negative equity but still a substantive deficit.

Debt to equity ratio

Data for the debt to equity ratio is not supplied, preventing precise calculation. However, qualitatively, given the persistent equity deficit alongside varying but increasing total debt, it can be inferred that the company’s leverage is significant and likely elevated in later periods. The combination of increasing debt and negative equity suggests heightened financial risk and potential concerns regarding solvency or capital structure stability over time.

Overall, the data indicates a capital structure characterized by substantial leverage, with total debt demonstrating a pattern of reduction followed by increase, and shareholders’ equity remaining negative but improving modestly. The trend towards higher debt levels coupled with persistent negative equity highlights the importance of closely monitoring financial risk and the company’s ability to manage its debt obligations in forthcoming quarters.

Total Debt

The total debt exhibited a general declining trend from March 31, 2020, through March 31, 2021, decreasing from $39,153 million to $35,723 million. However, after this period, the debt levels fluctuated moderately, with some increases noted particularly toward the end of 2021 and into 2023. By December 31, 2023, total debt reached $39,345 million, showing a rebound above the earlier lows. Subsequently, total debt showed variability but tended to remain elevated, closing at $41,403 million as of June 30, 2025, representing a notable increase compared to the beginning of the period.

Total Capital

Total capital mirrored a somewhat similar pattern of fluctuations. Initially, total capital decreased from $29,859 million in March 31, 2020, to a low of $27,998 million around March 31, 2022. After that, a recovery phase began, marked by steady growth throughout 2023 and 2024, with total capital reaching $38,643 million by June 30, 2025. This indicates an overall increase in the capital base over the five-year period, particularly strong in the last two years.

Debt to Capital Ratio

The Debt to Capital ratio started at relatively high levels, around 1.31 in March 2020, and declined steadily during 2020 and 2021, reaching a low of 1.10 by June 2025. This decreasing ratio suggests a gradual improvement in the company’s capital structure, implying less reliance on debt relative to total capital over time. Despite fluctuations in absolute debt and capital amounts, the ratio’s downward trend suggests a strengthening financial position in terms of leverage.

Overall Trends and Insights

The data reveals an initial reduction in both total debt and capital through early 2022, reflective of possible deleveraging and capital base contraction. Starting in 2022 and continuing into mid-2025, both debt and capital increased, with capital growing more consistently, leading to a decline in the debt to capital ratio. This trend highlights an effort to enhance financial stability by expanding the capital base relative to debt. The decrease in the leverage ratio combined with rising capital indicates improved solvency and potentially greater capacity to manage financial obligations going forward.

Total Debt

The total debt displays a generally fluctuating pattern over the observed periods. Initially, debt decreases consistently from 39,153 million USD at the end of Q1 2020 to a low of 33,989 million USD by Q1 2022, indicating a reduction in leverage. However, following this trough, total debt tends to increase almost steadily, reaching a peak of 41,403 million USD by Q2 2025. This suggests a reversal in the earlier deleveraging trend and a move toward higher borrowing or increased liabilities in recent periods.

Total Assets

Total assets show some volatility but an overall upward trajectory across the timeline. Starting at 50,568 million USD in Q1 2020, assets fluctuate with minor declines in mid-2022 but subsequently recover and grow, reaching 59,555 million USD by Q2 2025. This growth in assets implies expansion or acquisition activity, improving the asset base over time.

Debt to Assets Ratio

The debt to assets ratio exhibits a downward trend in the first half of the timeline, falling from 0.77 in Q1 2020 to a low of 0.66 in Q4 2021. This decline indicates an improving capital structure with relatively lower leverage against assets. Post-2021, the ratio stabilizes and oscillates between 0.69 and 0.72 through Q2 2025, implying a maintained and moderately high debt load relative to assets. The stabilization suggests that the company has settled into a consistent leverage policy after the initial reduction phase.

Overall Insights

The data reveals a phase of debt reduction coupled with asset growth early on, suggesting efforts to strengthen financial stability and reduce leverage. The subsequent increase in total debt alongside continued asset growth points to a strategic shift or external factors prompting higher borrowing. The relatively stable debt to assets ratio in the latter years indicates a balancing act between managing leverage and supporting asset growth. Continuous monitoring of these trends will be essential to assess financial risk and capital management strategies going forward.

The analysis of the quarterly financial data reveals several notable trends in asset composition, equity position, and financial leverage over the approximately five-year period examined.

Total assets

The total assets initially remained relatively stable around the 50 to 53 billion USD range between early 2020 and early 2021, with a minor increase from 50.6 billion in March 2020 to a peak near 53.9 billion at the end of 2021. However, during 2022, total assets showed some volatility with a decline to approximately 48.5 billion USD by September 2022, followed by a recovery towards the end of that year and into early 2023. From 2023 onwards, a visible upward trend is observed, culminating in a notable increase to nearly 59.6 billion USD by mid-2025. This upward movement suggests an expansion in the company's asset base in the later years, possibly reflecting investment activities, acquisitions, or organic growth.

Shareholders’ equity (deficit)

Shareholders’ equity consistently presented a deficit throughout the timeframe, indicating that liabilities exceeded assets in the net accounting sense. The deficit started at approximately -9.3 billion USD in March 2020 and improved somewhat over time but remained negative. The magnitude of the deficit decreased steadily, from highs nearing -9.4 billion early in 2020 to less negative values nearing -2.8 billion by the end of 2024 and early 2025. This progressive reduction in equity deficit points to potential deleveraging actions or profitability improvements offsetting accumulated losses. However, equity remaining in deficit territory still suggests underlying capital structure or accounting issues possibly related to accumulated deficits or other comprehensive losses.

Financial leverage

The financial leverage ratio was not reported in the data, preventing direct analysis of leverage trends through standard ratio measures. However, the relationship between asset levels and shareholders’ equity deficits allows preliminary inference that leverage was relatively high, given persistent equity deficits despite rising asset values. The reduction in equity deficit over time might indicate a gradual improvement in leverage position.

Overall, the data depict a company maintaining a stable to growing asset base with persistent but improving shareholder equity deficits across the period. The absence of specific leverage ratio data limits comprehensive leverage assessment, but trends suggest a movement toward strengthening equity over time. This situation warrants monitoring to confirm continued asset growth translates into positive equity and improved financial stability.

Earnings Before Interest and Tax (EBIT)

The EBIT values demonstrate noticeable fluctuations over the observed quarters. Starting from 1725 million USD in March 2020, there was a decline to 968 million USD by June 2020, followed by a sharp increase to 2527 million USD in September 2020. Subsequently, EBIT values remained generally high with some variability, reaching a peak of 3264 million USD in September 2023. Although declines occurred intermittently, the overall trajectory suggests growth compared to early 2020 levels, with values consistently above 2500 million USD in the later quarters. This trend indicates sustained operational profitability with periods of acceleration and consolidation.

Interest Expense

Interest expenses showed a gradual upward trend across the quarters. Beginning at 280 million USD in March 2020, the expense increased consistently to reach 390 million USD by June 2025. The rise, although steady, is moderate relative to EBIT growth, reflecting either increased debt levels or rising interest rates over time. The gradual nature of the increase suggests management has maintained a controlled approach to financing costs despite external economic factors.

Interest Coverage Ratio

The interest coverage ratio, calculated as EBIT divided by interest expense, improved significantly after the initial quarters. No data is reported for the first few quarters, but from September 2020 onward, the ratio increased from 6.04 to a high range between approximately 7.8 and 8.8 in subsequent quarters. The ratio peaked at around 8.82 in September 2023, demonstrating strong ability to cover interest obligations through operating earnings. Despite minor fluctuations, the coverage ratio remained comfortably above 7.0, indicating a healthy cushion against interest-related risks.

Overall Financial Insights

The reported financial data highlights robust operational performance with EBIT recovery and growth following an initial drop in early 2020. Interest expenses rose moderately but did not outpace earnings growth, resulting in solid interest coverage ratios throughout the majority of the period. These patterns suggest effective financial management, maintaining profitability and sufficient earnings to meet financing costs. The cyclical movements in EBIT may reflect operational seasonality or business environment influences, but the general trend leans toward improved profitability and financial stability over the timeframe examined.