McDonald’s Corp. (NYSE:MCD)

The financial data depicts notable trends in leverage and interest coverage ratios over multiple quarters from March 2020 to March 2025.

Debt to Capital Ratio

The debt to capital ratio begins at a high level of 1.31 in March 2020 and follows a general downward trajectory over the reporting periods. Initially showing a slight decline from 1.31 to 1.15 by December 2021, the ratio stabilizes somewhat between 1.20 and 1.10 in subsequent quarters. This gradual reduction indicates a modest deleveraging effort or a relative increase in capital compared to debt.

Debt to Assets Ratio

This ratio starts at 0.77 in March 2020, showing a decreasing trend to a low of 0.66 by December 2021, implying reduced reliance on debt relative to total assets during this phase. Following this period, the ratio fluctuates around the 0.70 to 0.72 mark, suggesting some stabilization. However, minor increases and decreases in the latter years indicate a more consistent leverage level relative to assets without significant volatility.

Interest Coverage Ratio

Information for interest coverage is available starting mid-2020, where it initiates at 6.04 and exhibits a steady increase through 2021, reaching a peak of 8.82 by September 2023. Subsequently, a slight decline is observed, moving down toward 7.80 by March 2025. The initial upward trajectory reflects improved ability to cover interest expenses, potentially due to increased earnings or reduced interest expense. The latter moderation suggests stabilization in operational earnings relative to interest obligations.

Overall, the patterns suggest an initial period of strong leverage reduction paired with enhanced coverage of interest obligations, indicating improved financial health and reduced risk related to debt service. The flattening ratios in recent years imply a shift towards maintaining a consistent leverage position with stable earnings capacity relative to interest costs.

The financial data reveals several noteworthy trends over the time span analyzed.

Total Debt

The total debt has exhibited fluctuations with a general downward trend from the beginning of 2020 to early 2021, declining from 39,153 million USD to 35,723 million USD. From mid-2021 onwards, total debt shows a pattern of gradual increase, peaking at 39,586 million USD in the third quarter of 2024 before slightly decreasing to 38,925 million USD by the first quarter of 2025. This indicates that the company initially managed to reduce its debt load but later increased borrowing, possibly indicating more aggressive financing activities or strategic investments.

Shareholders’ Equity (Deficit)

Shareholders' equity has consistently shown a negative balance throughout the entire period, reflecting a deficit condition. The deficit deepened from -9,293 million USD at the first quarter of 2020 to a less negative figure around -4,601 million USD in the last quarter of 2021, signifying some improvement in equity. However, from early 2022 onwards, the equity deficit trends upward negatively again, fluctuating between -6,370 million USD and -3,454 million USD by the first quarter of 2025. The fluctuations suggest ongoing challenges in recovering a positive equity position, despite some periods of reduced deficit levels.

Debt to Equity Ratio

The data for the debt to equity ratio is missing across all periods, so no direct conclusions can be drawn regarding leverage from this ratio. Nonetheless, given the persistent negative shareholders’ equity combined with relatively high levels of total debt, it is likely that the debt to equity ratio would be substantially elevated or undefined in most periods, illustrating significant financial leverage and potential solvency risk.

Overall, the company appears to be maintaining elevated leverage levels, with periodic increases in total debt alongside a continuing equity deficit. This pattern may imply reliance on debt financing to support operations or growth, with equity position remaining structurally weak over the analyzed timeframe.

The analysis of the financial data over the specified periods reveals notable trends in the company's debt and capital structure.

Total Debt

The total debt shows fluctuating values over the quarters with an initial peak around March 31, 2020, at approximately 39,153 million US dollars. It then gradually declines through the end of 2021, reaching a low point near 33,989 million US dollars by the first quarter of 2022. Subsequently, total debt increases again, peaking near 39,586 million US dollars around September 30, 2024, before a slight decrease by the end of the reported period. This pattern indicates periods of both debt reduction and re-leveraging activity.

Total Capital

Total capital similarly exhibits fluctuations. Beginning near 29,859 million US dollars in March 2020, it experiences a dip to approximately 27,998 million US dollars by the first quarter of 2022. Following this, total capital shows a sustained upward trend, reaching approximately 35,471 million US dollars at the end of the time series. This increase suggests an expansion in the overall funding base, possibly through equity or retained earnings, alongside stable or increased debt.

Debt to Capital Ratio

The debt to capital ratio starts at a relatively high figure of 1.31 in the first quarter of 2020, reflecting a financial structure with more debt relative to capital. Over time, the ratio trending downward to 1.10 by the end of the reported horizon indicates an improvement in the leverage position. This decline points to a gradual reduction in reliance on debt financing relative to the total capital base. The decreasing ratio coupled with rising total capital particularly in the later periods suggests prudent capital management, increasing the company’s financial stability.

Overall, the data reveals a lifecycle of debt management characterized by an initial phase of high leverage, followed by a marked improvement in capital structure, including controlled debt levels and growth in total capital resources. The improvement in the debt to capital ratio is indicative of strengthened financial health and possibly lower financial risk moving forward.

Total Debt

Total debt showed a generally decreasing trend from March 2020 through March 2021, declining from approximately $39.15 billion to $35.72 billion. This was followed by some fluctuations through 2022, with debt levels increasing slightly from $33.99 billion to $35.90 billion by the end of the year. In 2023, total debt initially rose to $37.13 billion by March, then decreased intermittently before rising again towards the end of the year and into early 2024. The highest level within this span occurred in December 2023 at $39.35 billion, with a slight decrease thereafter but remaining elevated relative to earlier years. Overall, total debt experienced moderate volatility but maintained a range between approximately $33.99 billion and $39.35 billion over the period.

Total Assets

Total assets displayed an overall upward trend with some short-term variability. From March 2020’s $50.57 billion, asset values increased modestly through 2021, reaching a peak of $53.85 billion by December 2021. However, during 2022, assets declined to a low near $48.50 billion by September before recovering toward the end of the year and again fluctuating through 2023. By December 2023 and into early 2024, assets exhibited meaningful growth up to approximately $56.17 billion, marking the highest values within the observed timeframe. This increase reflects a gradual strengthening of the asset base despite episodic decreases during mid-period quarters.

Debt to Assets Ratio

The debt to assets ratio generally trended downward from 0.77 in March 2020 to a low near 0.66 around December 2021, indicating a modest improvement in the company's leverage position relative to total assets. Following this low point, the ratio fluctuated around 0.70 to 0.72 through 2022 and 2023, suggesting somewhat increased leverage or stabilized debt levels in proportion to assets. By the end of the period, the ratio showed a slight improvement, decreasing to approximately 0.69 by March 2025. This pattern indicates that although debt fluctuated, the growth in assets was sufficient to maintain leverage around a moderate and manageable level over the observed periods.

The analysis of the financial data over multiple quarters reveals several notable trends and insights regarding asset levels and shareholders' equity.

Total Assets

The total assets exhibit fluctuations throughout the observed periods. Starting at approximately 50.6 billion US dollars in March 2020, assets slightly decreased in the middle of 2020 but then rose steadily towards the end of 2021, reaching over 53.8 billion US dollars. In 2022, there was a pronounced dip, falling below 49 billion US dollars in June and September, followed by a recovery trend that accelerated in late 2023 and into 2024. By the first quarter of 2025, total assets reached a peak of approximately 56.3 billion US dollars, marking the highest value in the data series.

Shareholders' Equity (Deficit)

The shareholders’ equity consistently shows a negative value, indicating a deficit throughout the periods. Starting at about -9.3 billion US dollars in March 2020, the deficit slightly improved by the end of 2020, moving closer to -7.8 billion. The equity deficit progressively decreased, reaching a minimal deficit near -4.6 billion in December 2021, which represents the lowest negative value and thus the strongest equity position in the series. Subsequently, the deficit widened again in 2022 and early 2023, fluctuating around -6.0 to -5.7 billion. From mid-2023 onwards, there is an evident improving trend, with the deficit narrowing consistently, reaching approximately -3.5 billion by the first quarter of 2025. This indicates an overall strengthening of the equity position despite remaining in deficit.

No data is provided for the financial leverage ratio, preventing any ratio-based leverage analysis or conclusions.

Overall, the asset base shows growth with periodic declines, and the shareholders' equity, while negative, demonstrates a clear trend towards a reduction in deficit, signifying improving financial health. The upward trend in total assets coupled with the narrowing equity deficit may suggest strategic efforts to enhance the balance sheet strength over the observed periods.

The data demonstrates variations in Earnings Before Interest and Tax (EBIT), interest expense, and interest coverage ratios over the analyzed periods.

Earnings Before Interest and Tax (EBIT)

The EBIT figures show notable fluctuations across quarters. There is a peak in the third quarter of 2020, followed by a decline in the fourth quarter of that year. Subsequently, EBIT tends to increase and reach higher levels by the end of 2021. In 2022, EBIT experiences some volatility with a dip in the first half followed by an increase in the second half. Entering 2023 and 2024, EBIT generally exhibits a positive trend, reaching its highest values in the third quarter of 2023. Although there is some decline observed toward the end of 2024 and into early 2025, EBIT remains above the levels seen at the start of the period, indicating relative growth overall.

Interest Expense

The interest expense remains relatively stable compared to EBIT, fluctuating within a narrower range. There is a slight upward trend visible over time, rising from 280 million US dollars in the first quarter of 2020 to values slightly above 370 million US dollars toward the end of 2024. This gradual increase suggests a moderate rise in borrowing costs or debt levels over the period.

Interest Coverage Ratio

The interest coverage ratio is available only from the third quarter of 2020 onward. It shows a generally strong position, starting at around 6 times coverage and improving to peak values above 8.7 times coverage in mid-2023. Slight declines occur afterward but the ratio remains consistently above 7.8 times coverage through early 2025. This indicates the company maintains a robust ability to meet interest obligations from operating earnings, reflecting financial soundness in the context of interest expense coverage.

In summary, the company has demonstrated strong operating earnings with some volatility but an overall upward trend. Interest expenses have increased modestly but are well-supported by EBIT, as evidenced by consistently high interest coverage ratios. This suggests a stable financial structure with solid earnings capacity to service debt obligations throughout the reported periods.