Profitability Analysis

Difficulty level: Basic


Ratios (Summary)

McDonald's Corp., profitability ratios

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Return on Sales
Gross profit margin 38.10% 38.79% 39.24% 39.57% 40.03%
Operating profit margin 28.97% 31.18% 31.21% 31.58% 31.04%
Net profit margin 17.34% 19.87% 19.82% 20.38% 20.55%
Return on Investment
Return on equity (ROE) 37.02% 34.89% 35.73% 38.24% 33.80%
Return on assets (ROA) 13.88% 15.25% 15.44% 16.68% 15.47%

Source: Based on data from McDonald's Corp. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. McDonald's Corp.'s gross profit margin deteriorated from 2012 to 2013 and from 2013 to 2014.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. McDonald's Corp.'s operating profit margin deteriorated from 2012 to 2013 and from 2013 to 2014.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. McDonald's Corp.'s net profit margin improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.
ROE A profitability ratio calculated as net income divided by shareholders' equity. McDonald's Corp.'s ROE deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.
ROA A profitability ratio calculated as net income divided by total assets. McDonald's Corp.'s ROA deteriorated from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top


Gross Profit Margin

McDonald's Corp., gross profit margin calculation

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in thousands)
Gross margin 10,455,700  10,902,700  10,816,300  10,686,600  9,637,300 
Revenues 27,441,300  28,105,700  27,567,000  27,006,000  24,074,600 
Ratio
Gross profit margin1 38.10% 38.79% 39.24% 39.57% 40.03%

Source: Based on data from McDonald's Corp. Annual Reports

2014 Calculations

1 Gross profit margin = 100 × Gross margin ÷ Revenues
= 100 × 10,455,700 ÷ 27,441,300 = 38.10%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. McDonald's Corp.'s gross profit margin deteriorated from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top


Operating Profit Margin

McDonald's Corp., operating profit margin calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in thousands)
Operating income 7,949,200  8,764,300  8,604,600  8,529,700  7,473,100 
Revenues 27,441,300  28,105,700  27,567,000  27,006,000  24,074,600 
Ratio
Operating profit margin1 28.97% 31.18% 31.21% 31.58% 31.04%
Benchmarks
Operating Profit Margin, Competitors
Starbucks Corp. 18.73% -2.19% 15.02% 14.77% 13.26%
YUM! Brands Inc. –% 13.74% 16.83% 14.38% 15.60%
Operating Profit Margin, Sector
Restaurants & Bars –% 18.25% 23.66% 23.52% 23.11%
Operating Profit Margin, Industry
Consumer Services –% 8.05% 7.78% 8.02% 7.66%

Source: Based on data from McDonald's Corp. Annual Reports

2014 Calculations

1 Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 7,949,200 ÷ 27,441,300 = 28.97%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. McDonald's Corp.'s operating profit margin deteriorated from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top


Net Profit Margin

McDonald's Corp., net profit margin calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in thousands)
Net income 4,757,800  5,585,900  5,464,800  5,503,100  4,946,300 
Revenues 27,441,300  28,105,700  27,567,000  27,006,000  24,074,600 
Ratio
Net profit margin1 17.34% 19.87% 19.82% 20.38% 20.55%
Benchmarks
Net Profit Margin, Competitors
Starbucks Corp. 12.57% 0.06% 10.40% 10.65% 8.83%
YUM! Brands Inc. –% 8.34% 11.71% 10.45% 10.21%
Net Profit Margin, Sector
Restaurants & Bars –% 11.92% 15.50% 15.72% 15.28%
Net Profit Margin, Industry
Consumer Services –% 5.14% 4.59% 4.87% 4.54%

Source: Based on data from McDonald's Corp. Annual Reports

2014 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 4,757,800 ÷ 27,441,300 = 17.34%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. McDonald's Corp.'s net profit margin improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.

ADVERTISEMENT

Top


Return on Equity (ROE)

McDonald's Corp., ROE calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in thousands)
Net income 4,757,800  5,585,900  5,464,800  5,503,100  4,946,300 
Shareholders’ equity 12,853,400  16,009,700  15,293,600  14,390,200  14,634,200 
Ratio
ROE1 37.02% 34.89% 35.73% 38.24% 33.80%
Benchmarks
ROE, Competitors
Starbucks Corp. 39.23% 0.19% 27.09% 28.41% 25.73%
YUM! Brands Inc. –% 50.37% 74.14% 72.35% 73.48%
ROE, Sector
Restaurants & Bars –% 29.51% 37.44% 39.17% 35.45%
ROE, Industry
Consumer Services –% 17.83% 15.66% 15.82% 13.88%

Source: Based on data from McDonald's Corp. Annual Reports

2014 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 4,757,800 ÷ 12,853,400 = 37.02%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. McDonald's Corp.'s ROE deteriorated from 2012 to 2013 but then improved from 2013 to 2014 exceeding 2012 level.

ADVERTISEMENT

Top


Return on Assets (ROA)

McDonald's Corp., ROA calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in thousands)
Net income 4,757,800  5,585,900  5,464,800  5,503,100  4,946,300 
Total assets 34,281,400  36,626,300  35,386,500  32,989,900  31,975,200 
Ratio
ROA1 13.88% 15.25% 15.44% 16.68% 15.47%
Benchmarks
ROA, Competitors
Starbucks Corp. 19.23% 0.07% 16.84% 16.92% 14.81%
YUM! Brands Inc. –% 12.55% 17.72% 14.93% 13.92%
ROA, Sector
Restaurants & Bars –% 11.76% 16.05% 16.40% 15.10%
ROA, Industry
Consumer Services –% 7.20% 6.41% 6.69% 6.35%

Source: Based on data from McDonald's Corp. Annual Reports

2014 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 4,757,800 ÷ 34,281,400 = 13.88%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. McDonald's Corp.'s ROA deteriorated from 2012 to 2013 and from 2013 to 2014.

ADVERTISEMENT

Top