McDonald’s Corp. (NYSE:MCD)

The financial data reveals several insights in terms of leverage and coverage ratios over the analyzed periods.

Debt to capital ratio

The debt to capital ratio has demonstrated a gradual declining trend overall. Starting at 1.25 in the first quarter of 2021, it decreased consistently to 1.06 by the third quarter of 2025, indicating a reduction in reliance on debt financing relative to total capital over time. This suggests a strengthening capital structure and possibly improved financial stability.

Debt to assets ratio

This ratio fluctuates slightly over the periods but remains relatively stable, generally oscillating around 0.7. It starts at 0.70 in the first quarter of 2021, reaches a slight peak of 0.72 in several quarters (notably September 2022 and September 2023), and ends slightly lower at 0.68 in the third quarter of 2025. The stability implies consistent leverage relative to the company’s asset base without significant shifts in asset financing strategy.

Interest coverage ratio

The interest coverage ratio shows a positive trend with variations. Beginning at 6.37 in March 2021, the ratio improved sharply through 2021, peaking around 8.7 by the end of 2021. There is some oscillation between 7.4 and 8.8 from 2022 through mid-2024, but overall coverage remains solid above 7.8 in the final reported periods. This indicates an ability to comfortably cover interest expenses with operating earnings, reflecting healthy operational performance and potentially lower risk related to debt servicing.

In summary, the data reflects a gradual reduction in debt relative to capital, stable asset leverage, and strong capacity to meet interest obligations. These trends point to a generally improved or stable financial position, with prudent balance sheet management maintaining adequate leverage while supporting interest coverage ratios at comfortable levels.

The financial data reveals several notable trends concerning debt, shareholders’ equity, and leverage ratios over the multiple quarterly periods analyzed.

Total Debt

Total debt exhibited a generally increasing trend over the time frame. Beginning at approximately $35.7 billion, the debt level showed fluctuations but mostly rose, peaking at around $41.4 billion by September 2025. Noteworthy increases occurred toward the latter quarters, especially after March 2023, signaling that the company increased its borrowings or long-term liabilities significantly during this period.

Shareholders’ Equity (Deficit)

Shareholders’ equity, which remained negative throughout all the periods, indicated a deficit situation. The equity deficit improved slightly from -$7.2 billion at the start to around -$2.2 billion by September 2025, reflecting a steady but modest reduction in the equity shortfall. This steady reduction toward less negative values implies some recovery or accumulation of positive retained earnings, asset revaluations, or share buybacks affecting equity components. However, the equity remained negative, which may indicate ongoing financial stress or significant liabilities exceeding assets on the balance sheet.

Debt to Equity Ratio

The debt to equity ratio data was not provided explicitly, but given the upward trend in total debt combined with a consistently negative but improving equity position, the leverage likely remained very high and volatile. Because equity was negative throughout, the ratio would generally be negative or undefined, which complicates traditional leverage assessment. The persistence of negative equity alongside increasing debt suggests elevated financial risk and potential difficulty in meeting equity-based covenant requirements.

Overall Financial Implications

The analysis highlights a company managing through a period of increasing debt obligations while gradually reducing its equity deficit. The continuous presence of negative shareholders’ equity raises concerns about solvency, whereas the rising total debt level suggests reliance on external financing. The company may face challenges in improving its balance sheet strength if these trends continue without a corresponding increase in asset values or profitability. Careful monitoring of leverage and funding strategies will be critical going forward.

Total Debt

The total debt exhibits fluctuations over the reported periods. Initially, from early 2021 through late 2021, the total debt slightly decreased from 35,723 million USD to 35,623 million USD with minor variations within the quarters. Early 2022 showed a further decline reaching 33,989 million USD in March, followed by a gradual increase through the subsequent quarters, peaking at 39,345 million USD by the end of 2022.

In 2023, the total debt continued to rise initially, reaching a high of 39,345 million USD by December 2023, before experiencing mild fluctuations but generally maintaining elevated levels near the upper 38,000 to 41,000 million USD range. By late 2025, the debt stands at approximately 41,283 million USD, indicating an overall upwards trajectory across the four-year span.

Total Capital

Total capital exhibits a pattern of incremental growth with minor deviations. It starts at 28,488 million USD in March 2021 and shows some volatility during 2021, decreasing slightly by the year-end. Throughout 2022, total capital increased steadily, moving from 27,998 to 29,900 million USD by December.

From early 2023 onward, the total capital continued to strengthen, showing consistent growth to reach 34,639 million USD by December 2023. This trend continues into 2024 and 2025, where total capital moves from approximately 32,535 million USD in early 2024 to around 39,120 million USD by late 2025, reflecting ongoing capital base expansion.

Debt to Capital Ratio

This ratio has been on a downward trajectory, indicating an improvement in the company’s capital structure relative to its debt levels. Starting at 1.25 in March 2021, the ratio steadily declines over time, showing minor fluctuations but a general tendency toward reduction.

By the end of 2022, the ratio decreases to roughly 1.14 and continues to improve slightly over the following years. By late 2025, the ratio reaches approximately 1.06, suggesting enhanced capital management and potentially less reliance on debt relative to total capital. This movement points towards a strengthening financial position in terms of leverage.

The analysis of the quarterly financial data reveals several notable trends concerning debt and asset levels and their relationship over the observed periods.

Total Debt

Over the examined quarters, total debt fluctuated moderately with a general upward trend towards the latter periods. Initial values around the low 35,000 million USD mark experienced slight decreases through 2021 and early 2022, followed by an increase starting in late 2022. Notably, debt peaked during the final quarters of 2024 and early 2025 nearing or exceeding 41,000 million USD. This upward movement suggests increased leverage or financing activities during those later periods.

Total Assets

Total assets demonstrated some volatility but showed an overall positive trajectory over the period. After a peak near mid-2021 around 53,000 million USD, assets experienced declines through mid-2022 before rebounding substantially from late 2022 onwards. By the most recent quarter, assets had risen substantially, reaching over 60,000 million USD. This recovery and growth indicate strengthening asset base and potentially expanded operational or investment activities.

Debt to Assets Ratio

The ratio of debt to assets remained relatively stable, oscillating around the 0.7 level throughout the entire period. Initially, the ratio was slightly above 0.7 but decreased to around 0.66 by the end of 2021, reflecting a relatively improved asset coverage against debt. However, from 2022 onward, the ratio reverted back toward 0.7, sometimes peaking at about 0.72 before declining slightly again near the end of the period. This consistency in leverage ratio suggests that increases in debt were largely matched by corresponding increases in assets, maintaining a steady leverage profile.

In summary, the financial data indicates a strategy maintaining consistent leverage while managing growth in both debt and asset values. The rising asset levels combined with proportional increases in debt imply a controlled approach to growth financing. The stability of the debt to asset ratio around 0.7 reflects this balance, indicating neither significant deleveraging nor excessive risk-taking in capital structure over the observed time frame.

The analysis of the quarterly financial data reveals several notable trends in the company’s financial position over the observed periods.

Total Assets

The total assets exhibit a fluctuating but generally increasing trend over time. Initially, assets decreased from US$51,103 million at the end of March 2021 to US$48,502 million by September 2022. Subsequently, there is a notable increase, reaching US$56,172 million by September 2024 and continuing an upward trajectory to US$60,608 million by September 2025. This suggests a period of asset consolidation followed by renewed growth or expansion.

Shareholders’ Equity (Deficit)

Shareholders’ equity shows persistent negative values throughout all the periods, indicating a deficit. While the deficit decreased from -US$7,236 million in March 2021 to a lower deficit around -US$4,601 million in December 2021, it then worsened again, reaching approximately -US$6,566 million by September 2022. Thereafter, a gradual improvement is observed as the deficit reduces steadily, reaching a smaller negative figure of -US$2,163 million by September 2025. This improvement could reflect efforts to strengthen financial stability and reduce equity deficits over time.

Financial Leverage

Data on financial leverage are not provided, which limits a direct assessment of the company’s leverage ratio trends. However, the interaction between asset growth and changes in shareholders’ equity suggests some shifts in the capital structure that could impact leverage metrics.

Overall, the company demonstrates an initial contraction in total assets followed by recovery and growth, while shareholders’ equity remains negative but improves consistently in later periods. The gradual reduction of equity deficit alongside rising total assets suggests enhanced financial health and possible deleveraging or capital restructuring efforts. The absence of explicit financial leverage data requires caution in fully assessing risk levels related to indebtedness.

The financial data over the observed periods reflects notable fluctuations and trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratio.

Earnings Before Interest and Tax (EBIT)

The EBIT values exhibit substantial variability across quarters. Initially, from early 2021 through to the end of 2021, EBIT showed a general upward trend, peaking around Q3 2021 followed by a decline in Q4 2021. The first half of 2022 indicates relatively lower EBIT figures compared to the prior year, but a significant recovery occurs in Q3 2022. Throughout 2023 and into 2024, EBIT increased with some oscillations, hitting high values especially in Q3 2023 and Q3 2024. However, Q4s tend to show a dip compared to Q3s in most years. By the end of the forecast period in 2025, EBIT remains elevated, reinforcing a general recovery and growth phase compared to mid-2022.

Interest Expense

Interest expense has incrementally increased over the observed periods. Starting from roughly 300 million USD in early 2021, the figures steadily rise, reaching above 400 million USD by late 2025. The increase appears gradual but consistent, indicating possibly higher debt levels or increased borrowing costs over time.

Interest Coverage Ratio

The interest coverage ratio, which measures the company's ability to meet interest obligations from EBIT, shows an initial enhancement from early 2021 through the end of 2021, peaking at 8.7 and remaining relatively stable around 7.4 to 8.8 in subsequent quarters. Despite rising interest expense, the coverage ratio remains strong above 7.5 through to 2025, indicating sustained ability to cover interest costs comfortably. The ratio oscillates slightly but remains close to 8, suggesting that growth in EBIT generally offsets the increasing interest burden.

In summary, the financial performance as measured by EBIT displays cyclicality with peaks frequently in the third quarter, followed by modest declines in the fourth quarter. Interest expenses show a steady upward trajectory, possibly revealing a gradual increase in financial leverage or interest rates. Despite this, the interest coverage ratio remains stable and above conservative thresholds, reflecting consistent operational earnings sufficient to manage interest obligations efficiently. This combination suggests overall resilient profitability and sound debt servicing capacity over the forecast horizon.