Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Profitability Ratios (Summary)
McDonald’s Corp., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability metrics demonstrate a generally positive trend over the observed period, though with some fluctuations. Gross profit margin exhibited an initial increase, followed by a slight decline and subsequent recovery. Operating and net profit margins experienced more pronounced variability, while return on assets remained relatively stable.
- Gross Profit Margin
- The gross profit margin increased from 54.17% in 2021 to 56.97% in 2022, indicating improved efficiency in managing the cost of goods sold. A minor decrease to 56.75% occurred in 2024, but the metric recovered to 57.41% in 2025, suggesting a sustained ability to maintain profitability at the gross level.
- Operating Profit Margin
- The operating profit margin experienced a decrease from 44.59% in 2021 to 40.42% in 2022, potentially due to increased operating expenses. A significant recovery followed, with the margin rising to 45.68% in 2023 and holding relatively steady at 45.19% and 46.10% in 2024 and 2025, respectively. This suggests successful cost management or revenue growth initiatives.
- Net Profit Margin
- The net profit margin showed the most volatility, declining from 32.49% in 2021 to 26.65% in 2022. It then rebounded to 33.22% in 2023, followed by a slight decrease to 31.72% in 2024, and remained stable at 31.85% in 2025. This pattern indicates sensitivity to factors beyond gross profit and operating expenses, such as interest expense or taxes.
- Return on Assets
- Return on assets decreased from 14.01% in 2021 to 12.25% in 2022, then increased to 15.08% in 2023. The metric remained high at 14.90% in 2024, before decreasing slightly to 14.39% in 2025. This suggests a generally efficient use of assets to generate profit, with some year-to-year fluctuation.
Overall, the observed trends suggest a business that is generally profitable and capable of adapting to changing conditions. While some margins experienced temporary declines, they generally demonstrated recovery or stabilization in subsequent periods. The consistent return on assets indicates effective asset utilization.
Return on Sales
Return on Investment
Gross Profit Margin
McDonald’s Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross margin | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Gross profit margin = 100 × Gross margin ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited an overall positive trend between 2021 and 2025, although with some fluctuation. Gross margin in dollar terms consistently increased throughout the period, rising from US$12,580 million in 2021 to US$15,434 million in 2025. Revenues also increased over the same timeframe, moving from US$23,223 million to US$26,885 million. The gross profit margin, expressed as a percentage, demonstrates a more nuanced pattern.
- Gross Profit Margin Trend
- The gross profit margin increased from 54.17% in 2021 to 56.97% in 2022, representing a substantial improvement. This upward trajectory continued into 2023, reaching 57.12%. A slight decrease was observed in 2024, with the margin falling to 56.75%. However, the metric recovered in 2025, closing at 57.41%, the highest value recorded during the analyzed period.
The initial increase in gross profit margin suggests improved cost management or increased pricing power. The dip in 2024 warrants further investigation to determine the underlying cause, such as increased cost of goods sold or promotional activity. The subsequent recovery in 2025 indicates that any factors impacting the 2024 margin were either temporary or successfully addressed. The consistent growth in both gross margin and revenues suggests a healthy business performance overall.
- Revenue and Gross Margin Relationship
- The correlation between revenue growth and gross margin expansion indicates that increased sales are contributing to higher overall profitability. The company appears to be effectively translating revenue gains into improved gross profits. The percentage margin remained relatively stable, fluctuating within a narrow range of approximately 56.75% to 57.41% between 2022 and 2025, suggesting consistent operational efficiency despite revenue fluctuations.
In conclusion, the gross profit margin demonstrates a generally positive trend, with a slight dip in 2024 followed by a recovery. The interplay between revenue growth and margin expansion suggests a robust financial performance.
Operating Profit Margin
McDonald’s Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| Starbucks Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Consumer Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a fluctuating, yet generally positive, trend over the five-year period. Initial observations reveal a decrease followed by consistent increases, culminating in the highest margin recorded in the final year.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 44.59%. A decline was observed in 2022, with the margin decreasing to 40.42%. This represents the lowest margin within the observed timeframe. Subsequently, the margin began a consistent upward trajectory, reaching 45.68% in 2023. This positive trend continued into 2024, with a margin of 45.19%, followed by a further increase to 46.10% in 2025. This indicates improving operational efficiency or pricing power over the latter part of the period.
The operating income generally increased over the period, though not consistently with the operating profit margin. Revenues also demonstrated an overall upward trend. The interplay between revenue growth and operating income is a key driver of the observed margin fluctuations.
- Relationship between Revenues and Operating Income
- Revenues experienced a slight decrease between 2021 and 2022, coinciding with the largest drop in operating profit margin. From 2022 onward, revenues increased annually, and this growth appears to be correlated with the subsequent improvements in the operating profit margin. The increase in operating income from 2022 to 2023 was proportionally larger than the increase in revenues, contributing to the significant margin expansion during that year.
The final year, 2025, shows the highest operating profit margin and operating income, suggesting successful strategies in cost management or revenue generation. The consistent improvement in the operating profit margin from 2022 to 2025 warrants further investigation to identify the underlying factors driving this positive performance.
Net Profit Margin
McDonald’s Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| Starbucks Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Consumer Services | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited fluctuations over the five-year period. Initial values decreased before stabilizing and showing a slight upward trend towards the end of the period. A detailed examination of the net profit margin and its underlying components reveals specific patterns in the company’s profitability.
- Net Profit Margin – Overall Trend
- The net profit margin began at 32.49% in 2021. A notable decrease was observed in 2022, falling to 26.65%. Subsequently, the margin recovered to 33.22% in 2023. This was followed by a slight decline to 31.72% in 2024, and a further incremental increase to 31.85% in 2025. This suggests a period of profitability challenges in 2022, followed by a recovery and stabilization in subsequent years.
- Net Income and Revenue Relationship
- Net income decreased from US$7,545 million in 2021 to US$6,177 million in 2022, coinciding with the drop in net profit margin. However, net income increased to US$8,469 million in 2023, supporting the margin recovery. While net income experienced minor fluctuations in 2024 and 2025, remaining around the US$8,200-US$8,500 million range, revenues consistently increased throughout the period. Revenues rose from US$23,223 million in 2021 to US$26,885 million in 2025. The consistent revenue growth, coupled with the stabilization of net income, contributed to the stabilization of the net profit margin in the later years.
- Year-over-Year Changes
- The largest year-over-year decrease in net profit margin occurred between 2021 and 2022, with a decline of 5.84 percentage points. The most significant increase was observed between 2022 and 2023, with an increase of 6.57 percentage points. The changes between 2023 and 2024, and 2024 and 2025 were relatively small, indicating a period of more consistent profitability.
In conclusion, the net profit margin demonstrates a pattern of initial decline, followed by recovery and stabilization. The interplay between net income and revenue growth appears to be a key driver of these trends. While the margin did not return to its 2021 peak, the consistent revenue increases and relatively stable net income suggest a strengthening of the company’s profitability position in the later years of the observed period.
Return on Equity (ROE)
McDonald’s Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Shareholders’ equity (deficit) | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| Starbucks Corp. | ||||||
| ROE, Sector | ||||||
| Consumer Services | ||||||
| ROE, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × ÷ =
2 Click competitor name to see calculations.
The period under review demonstrates fluctuating net income alongside significant changes in shareholders’ equity, resulting in a volatile return on equity (ROE). Net income decreased from 2021 to 2022, then increased through 2023 and remained relatively stable in 2024 and 2025. Shareholders’ equity, however, exhibited a more pronounced pattern of change, initially decreasing, then showing improvement, and finally a substantial increase.
- Net Income Trend
- Net income began at US$7,545 million in 2021, declining to US$6,177 million in 2022. A recovery was then observed, with net income rising to US$8,469 million in 2023. Subsequent years saw a slight decrease to US$8,223 million in 2024, followed by a further increase to US$8,563 million in 2025. This suggests a period of initial challenge followed by strengthening performance.
- Shareholders’ Equity Trend
- Shareholders’ equity started at a deficit of US$4,601 million in 2021, worsening to a deficit of US$6,003 million in 2022. A gradual improvement followed, reducing the deficit to US$4,707 million in 2023 and further to US$3,797 million in 2024. By 2025, the deficit had significantly decreased to US$1,791 million, indicating a substantial strengthening of the company’s equity position.
- Return on Equity (ROE) Implications
- Given the negative shareholders’ equity values for the majority of the period, the ROE calculation is inherently complex and potentially misleading. While the ROE values are not explicitly provided, the combination of fluctuating net income and changing (and initially negative) equity suggests significant volatility in the return generated on shareholder investment. The improvement in shareholders’ equity towards the end of the period would be expected to positively influence ROE, assuming net income remains stable or increases. Further analysis would require the calculated ROE values to fully assess the trend and its implications.
The observed trends suggest a company navigating a period of financial adjustment. The recovery in shareholders’ equity is a positive development, but the initial negative equity position warrants continued monitoring. The stability of net income in the later years, coupled with the improving equity position, could indicate a strengthening financial foundation.
Return on Assets (ROA)
McDonald’s Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| Starbucks Corp. | ||||||
| ROA, Sector | ||||||
| Consumer Services | ||||||
| ROA, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a fluctuating, yet generally positive, trend over the five-year period. Initial observations indicate a decrease followed by a recovery and subsequent stabilization.
- Overall Trend
- The ROA began at 14.01% in 2021, decreased to 12.25% in 2022, and then increased significantly to 15.08% in 2023. The ratio experienced a slight decline to 14.90% in 2024 before settling at 14.39% in 2025. This suggests an improvement in asset utilization efficiency followed by a period of relative consistency.
- Year-over-Year Changes
- The most substantial year-over-year change occurred between 2022 and 2023, with an increase of 2.83 percentage points in ROA. This coincided with an increase in net income and total assets. The decrease from 2021 to 2022 was 1.76 percentage points, reflecting a decline in net income alongside a reduction in total assets. The changes between 2023 and 2024, and 2024 and 2025 were comparatively minor, indicating a stabilization of profitability relative to asset base.
- Relationship to Net Income and Total Assets
- The ROA’s movements are directly correlated with changes in both net income and total assets. The increase in ROA from 2022 to 2023 is attributable to a more significant increase in net income (US$2,292 million) than in total assets (US$5,711 million). Conversely, the initial decline in 2022 was influenced by a larger decrease in net income (US$1,368 million) than in total assets (US$3,418 million). The relatively stable ROA in the later years suggests a balanced relationship between net income generation and asset deployment.
In conclusion, the ROA demonstrates a pattern of initial decline, strong recovery, and subsequent stabilization. The ratio consistently remained in the double-digit percentage range, indicating effective asset utilization in generating profits.