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
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
McDonald’s Corp., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
- Gross Profit Margin
- The gross profit margin demonstrated a generally upward trend from 50.77% in 2020 to a peak of 57.12% in 2023, with a slight decline to 56.75% in 2024. This indicates an overall improvement in the company's efficiency in managing direct costs relative to sales over the analyzed period, maintaining a margin above 54% from 2021 onwards.
- Operating Profit Margin
- The operating profit margin experienced fluctuations throughout the period. It increased from 38.13% in 2020 to 44.59% in 2021, then declined to 40.42% in 2022 before rising again to 45.68% in 2023 and slightly decreasing to 45.19% in 2024. Despite the variations, the operating margin remained robust, consistently above 38%, with peaks indicating effective control over operating expenses during certain years.
- Net Profit Margin
- The net profit margin showed variability, rising from 24.63% in 2020 to 32.49% in 2021, dropping to 26.65% in 2022, then increasing substantially to 33.22% in 2023, followed by a modest decline to 31.72% in 2024. This pattern suggests fluctuations in overall profitability, influenced potentially by non-operating items, tax considerations, or other extraordinary factors affecting the bottom line.
- Return on Assets (ROA)
- Return on assets improved markedly from 8.99% in 2020 to 14.01% in 2021, followed by a reduction to 12.25% in 2022. Subsequent years showed recovery and growth, with ROA reaching 15.08% in 2023 and remaining relatively stable at 14.9% in 2024. This trend reflects enhanced asset utilization and profitability generation from asset investments after 2020, despite some performance variability in 2022.
- Return on Equity (ROE)
- No data is available for return on equity during the analyzed period, precluding analysis or interpretation of equity profitability trends.
Return on Sales
Return on Investment
Gross Profit Margin
McDonald’s Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| Starbucks Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross margin ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several important trends over the five-year period ending December 31, 2024.
- Gross Margin
- The gross margin exhibited a consistent increase year-over-year, starting at 9,752 million US dollars in 2020 and rising steadily to 14,710 million US dollars by 2024. This represents an overall growth of approximately 50.9% over the period, indicating enhanced profitability at the gross profit level.
- Revenues
- Revenues showed a positive upward trend from 19,208 million US dollars in 2020 to 25,920 million US dollars in 2024. This is an increase of about 35%, although there was a slight dip between 2021 (23,223 million) and 2022 (23,183 million). The revenue recovery in 2023 and 2024 suggests the company successfully regained momentum following a brief plateau.
- Gross Profit Margin
- The gross profit margin as a percentage of revenues improved notably from 50.77% in 2020 to a peak of 57.12% in 2023, followed by a very slight decrease to 56.75% in 2024. This improvement implies enhanced operational efficiency or favorable cost management contributing to improved profitability relative to revenue.
In summary, the data indicates strong growth in both revenues and gross margin, alongside an improving gross profit margin percentage. The upward trends suggest increased operational efficiency and revenue expansion over the analysis period, with only minor fluctuations that do not detract from the overall positive trajectory.
Operating Profit Margin
McDonald’s Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| Starbucks Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Consumer Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenues
- Revenues demonstrated a consistent upward trend over the five-year period, increasing from US$19,208 million in 2020 to US$25,920 million in 2024. There was a notable acceleration in growth between 2022 and 2024, with revenues rising steadily each year, reflecting a positive expansion in sales or service delivery.
- Operating Income
- Operating income also exhibited an overall increasing trend from US$7,324 million in 2020 to US$11,712 million in 2024. Despite a slight decline in 2022 compared to 2021, operating income recovered and grew significantly in the subsequent years, reaching its highest level in 2024. This pattern suggests effective management of operating costs and improved profitability following the dip.
- Operating Profit Margin
- The operating profit margin showed fluctuation during the period but remained relatively high overall. Starting at 38.13% in 2020, it peaked at 45.68% in 2023 before a slight decrease to 45.19% in 2024. This indicates that the company maintained strong control over operating expenses relative to revenue, with margins improving significantly after 2020 and stabilizing around the mid-40% range in the last two years.
- Overall Analysis
- The data depicts a company experiencing robust revenue growth accompanied by enhanced operational efficiency. The increase in operating income, coupled with the stable high operating profit margins, suggests sustained profitability improvements. Despite a temporary dip in operating income in 2022, the company managed to reverse this trend and strengthen its financial performance further through 2024. These trends indicate a solid operational foundation and an ability to generate increasing earnings from its revenue base.
Net Profit Margin
McDonald’s Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| Starbucks Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Consumer Services | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data indicates an overall positive trajectory in revenues over the five-year period, showing steady growth from 19,208 million US dollars in 2020 to 25,920 million US dollars in 2024. This trend reflects consistent expansion in sales or service demand.
Net income demonstrates more volatility but maintains an upward trend, rising from 4,731 million US dollars in 2020 to a peak of 8,469 million US dollars in 2023 before slightly declining to 8,223 million US dollars in 2024. This suggests fluctuations in profitability possibly due to operational factors or external conditions, though the general direction remains positive.
The net profit margin follows a similar fluctuating pattern, beginning at 24.63% in 2020 and rising to a high of 33.22% in 2023 before decreasing slightly to 31.72% in 2024. The margin improvement from 2020 to 2023 indicates increasing efficiency or favorable cost management relative to revenues. The slight decline in 2024, despite higher revenues than previous years, may signal rising costs or changing market conditions affecting profitability.
- Revenues
- Show consistent growth over the five years, indicating successful business expansion.
- Net Income
- Generally increasing with some year-to-year fluctuations, reflecting periods of enhanced profitability with minor downturns.
- Net Profit Margin
- Exhibits considerable improvement initially, reaching a peak before a marginal reduction, signifying effective profit management with slight recent challenges.
Return on Equity (ROE)
McDonald’s Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| Starbucks Corp. | ||||||
| ROE, Sector | ||||||
| Consumer Services | ||||||
| ROE, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period shows varying dynamics in net income and shareholders’ equity for the company.
- Net Income (US$ in millions)
- The net income experienced fluctuations throughout the period. There was a significant increase from 4,731 million in 2020 to 7,545 million in 2021, indicating strong profitability growth. However, this was followed by a decrease to 6,177 million in 2022. The net income then rose again to reach a peak of 8,469 million in 2023, suggesting a recovery or improved operational performance. In 2024, net income slightly declined to 8,223 million, remaining near the recent peak but showing a modest downward trend compared to the previous year.
- Shareholders’ Equity (US$ in millions)
- The shareholders’ equity was negative throughout the entire period, reflecting a deficit position. The deficit decreased significantly from -7,825 million in 2020 to -4,601 million in 2021, indicating some improvement in the company’s net asset position. However, the equity deficit widened again to -6,003 million in 2022, signaling potential challenges or losses impacting equity. In 2023, the deficit improved to -4,707 million and further to -3,797 million in 2024, marking a trend toward reducing negative equity, possibly due to retained earnings or other balance sheet adjustments.
- Return on Equity (ROE, %)
- The ROE data is not available, preventing direct assessment of profitability in relation to shareholders’ equity. Given the persistent negative equity, calculating ROE might be problematic or less meaningful in this context.
Overall, net income shows a generally positive trend with some volatility, while shareholders’ equity remains negative but demonstrates gradual improvement over time. This combination suggests that although the company is generating profits, it is still working through balance sheet challenges related to equity deficit.
Return on Assets (ROA)
McDonald’s Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| Starbucks Corp. | ||||||
| ROA, Sector | ||||||
| Consumer Services | ||||||
| ROA, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income exhibits a generally positive trend over the five-year period. Starting at 4,731 million US dollars in 2020, it increased significantly to 7,545 million in 2021. There was a decrease in 2022 to 6,177 million, followed by a substantial increase in 2023 reaching 8,469 million, and a slight decline to 8,223 million in 2024. Overall, the net income shows resilience with notable fluctuations but an upward trajectory from the initial value.
- Total Assets
- Total assets rose from 52,627 million US dollars in 2020 to 53,854 million in 2021, followed by a decline to 50,436 million in 2022. Subsequently, total assets increased to 56,147 million in 2023 before slightly decreasing again to 55,182 million in 2024. The asset base demonstrates some variability with periods of contraction and expansion, remaining relatively stable around the mid-50,000 million range.
- Return on Assets (ROA)
- Return on assets shows a positive and improving trend overall. It started at 8.99% in 2020, jumped to 14.01% in 2021, then decreased to 12.25% in 2022. The ratio improved again in 2023 to 15.08% and slightly decreased to 14.9% in 2024. Despite minor fluctuations, the ROA remains significantly higher than the initial year, indicating enhanced efficiency in generating profits from assets.
- Summary
- The company experienced growth in net income and profitability over the reviewed period, with some year-to-year volatility. Total assets fluctuated but remained relatively stable with a moderate upward trend. The return on assets improved notably, reflecting better utilization of resources to generate earnings. The overall financial performance suggests an effective management of assets and earnings despite occasional declines in specific years.