McDonald’s Corp. (MCD)


Short-term (Operating) Activity Analysis
Quarterly Data

Difficulty: Beginner


Ratios (Summary)

McDonald’s Corp., short-term (operating) activity ratios (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Turnover Ratios
Inventory turnover 161.76 203.33 180.47 180.75 177.03 207.30 211.55 217.25 215.60 144.55 153.89 147.26 139.63 143.35 141.76 150.56 138.98
Receivables turnover 4.10 4.55 4.90 6.07 6.44 8.73 10.02 11.19 10.38 11.61 12.61 14.05 12.70 14.75 14.48 16.11 14.96
Payables turnover 6.84 9.13 9.75 12.47 11.26 16.40 22.38 18.19 16.80 15.35 23.41 21.08 15.98 17.74 17.26 21.19 17.78
Working capital turnover 9.27 5.35 7.85 5.67 5.22 13.05 4.64 5.57 11.08 6.72 7.45 2.46 10.91 5.31 20.92 12.64
Average No. of Days
Average inventory processing period 2 2 2 2 2 2 2 2 2 3 2 2 3 3 3 2 3
Add: Average receivable collection period 89 80 74 60 57 42 36 33 35 31 29 26 29 25 25 23 24
Operating cycle 91 82 76 62 59 44 38 35 37 34 31 28 32 28 28 25 27
Less: Average payables payment period 53 40 37 29 32 22 16 20 22 24 16 17 23 21 21 17 21
Cash conversion cycle 38 42 39 33 27 22 22 15 15 10 15 11 9 7 7 8 6

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. McDonald’s Corp.’s inventory turnover improved from Q2 2018 to Q3 2018 but then deteriorated significantly from Q3 2018 to Q4 2018.
Receivables turnover An activity ratio equal to revenue divided by receivables. McDonald’s Corp.’s receivables turnover deteriorated from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. McDonald’s Corp.’s payables turnover declined from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.
Working capital turnover An activity ratio calculated as revenue divided by working capital. McDonald’s Corp.’s working capital turnover deteriorated from Q2 2018 to Q3 2018 but then improved from Q3 2018 to Q4 2018 exceeding Q2 2018 level.

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. McDonald’s Corp.’s average receivable collection period deteriorated from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.
Operating cycle Equal to average inventory processing period plus average receivables collection period. McDonald’s Corp.’s operating cycle deteriorated from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. McDonald’s Corp.’s average payables payment period increased from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. McDonald’s Corp.’s cash conversion cycle deteriorated from Q2 2018 to Q3 2018 but then improved from Q3 2018 to Q4 2018 exceeding Q2 2018 level.

Inventory Turnover

McDonald’s Corp., inventory turnover calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data (USD $ in thousands)
Company-operated restaurant expenses 1,956,600  2,047,900  2,130,500  2,130,900  2,210,100  2,479,800  2,903,300  2,816,400  3,035,900  3,239,500  3,248,100  3,175,300  3,418,600  3,607,700  3,596,300  3,354,300  3,676,700  3,874,700  3,969,800  3,767,100 
Inventories, at cost, not in excess of market 51,100  41,900  49,600  53,800  58,800  54,200  56,700  56,800  58,900  90,500  87,400  93,700  100,100  99,300  102,300  98,800  110,000  105,000  110,700  106,200 
Ratio
Inventory turnover1 161.76 203.33 180.47 180.75 177.03 207.30 211.55 217.25 215.60 144.55 153.89 147.26 139.63 143.35 141.76 150.56 138.98

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Inventory turnover = (Company-operated restaurant expensesQ4 2018 + Company-operated restaurant expensesQ3 2018 + Company-operated restaurant expensesQ2 2018 + Company-operated restaurant expensesQ1 2018) ÷ Inventories, at cost, not in excess of market
= (1,956,600 + 2,047,900 + 2,130,500 + 2,130,900) ÷ 51,100 = 161.76

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. McDonald’s Corp.’s inventory turnover improved from Q2 2018 to Q3 2018 but then deteriorated significantly from Q3 2018 to Q4 2018.

Receivables Turnover

McDonald’s Corp., receivables turnover calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data (USD $ in thousands)
Sales by Company-operated restaurants 2,371,200  2,511,000  2,594,900  2,535,600  2,673,100  3,064,300  3,569,600  3,411,900  3,652,800  3,972,100  3,916,600  3,753,500  4,030,200  4,282,900  4,261,100  3,914,100  4,296,700  4,596,200  4,785,900  4,490,500 
Accounts and notes receivable 2,441,500  2,266,800  2,217,200  1,951,600  1,976,200  1,569,000  1,457,300  1,336,700  1,474,100  1,349,800  1,267,100  1,162,100  1,298,700  1,136,200  1,178,600  1,091,800  1,214,400  1,226,700  1,294,500  1,229,700 
Ratio
Receivables turnover1 4.10 4.55 4.90 6.07 6.44 8.73 10.02 11.19 10.38 11.61 12.61 14.05 12.70 14.75 14.48 16.11 14.96

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Receivables turnover = (Sales by Company-operated restaurantsQ4 2018 + Sales by Company-operated restaurantsQ3 2018 + Sales by Company-operated restaurantsQ2 2018 + Sales by Company-operated restaurantsQ1 2018) ÷ Accounts and notes receivable
= (2,371,200 + 2,511,000 + 2,594,900 + 2,535,600) ÷ 2,441,500 = 4.10

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. McDonald’s Corp.’s receivables turnover deteriorated from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.

Payables Turnover

McDonald’s Corp., payables turnover calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data (USD $ in thousands)
Company-operated restaurant expenses 1,956,600  2,047,900  2,130,500  2,130,900  2,210,100  2,479,800  2,903,300  2,816,400  3,035,900  3,239,500  3,248,100  3,175,300  3,418,600  3,607,700  3,596,300  3,354,300  3,676,700  3,874,700  3,969,800  3,767,100 
Accounts payable 1,207,900  932,800  917,900  779,900  924,800  685,200  536,000  678,400  756,000  852,200  574,600  654,500  874,700  802,600  840,100  702,000  860,100  847,300  965,100  828,100 
Ratio
Payables turnover1 6.84 9.13 9.75 12.47 11.26 16.40 22.38 18.19 16.80 15.35 23.41 21.08 15.98 17.74 17.26 21.19 17.78

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Payables turnover = (Company-operated restaurant expensesQ4 2018 + Company-operated restaurant expensesQ3 2018 + Company-operated restaurant expensesQ2 2018 + Company-operated restaurant expensesQ1 2018) ÷ Accounts payable
= (1,956,600 + 2,047,900 + 2,130,500 + 2,130,900) ÷ 1,207,900 = 6.84

Ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. McDonald’s Corp.’s payables turnover declined from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.

Working Capital Turnover

McDonald’s Corp., working capital turnover calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data (USD $ in thousands)
Current assets 4,053,200  5,553,100  4,355,600  4,909,300  5,327,200  4,790,300  5,892,500  5,907,200  4,848,600  4,302,100  5,046,600  5,051,600  9,643,000  4,492,600  5,972,200  3,592,800  4,185,500  5,210,400  5,913,700  4,836,300 
Less: Current liabilities 2,973,500  3,626,700  2,970,300  2,821,400  2,890,600  3,740,200  2,743,300  3,220,700  3,468,300  4,476,700  2,667,200  2,858,700  2,950,400  2,956,500  2,760,800  2,751,900  2,747,900  4,179,600  3,391,700  3,101,200 
Working capital 1,079,700  1,926,400  1,385,300  2,087,900  2,436,600  1,050,100  3,149,200  2,686,500  1,380,300  (174,600) 2,379,400  2,192,900  6,692,600  1,536,100  3,211,400  840,900  1,437,600  1,030,800  2,522,000  1,735,100 
Sales by Company-operated restaurants 2,371,200  2,511,000  2,594,900  2,535,600  2,673,100  3,064,300  3,569,600  3,411,900  3,652,800  3,972,100  3,916,600  3,753,500  4,030,200  4,282,900  4,261,100  3,914,100  4,296,700  4,596,200  4,785,900  4,490,500 
Ratio
Working capital turnover1 9.27 5.35 7.85 5.67 5.22 13.05 4.64 5.57 11.08 6.72 7.45 2.46 10.91 5.31 20.92 12.64

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Working capital turnover = (Sales by Company-operated restaurantsQ4 2018 + Sales by Company-operated restaurantsQ3 2018 + Sales by Company-operated restaurantsQ2 2018 + Sales by Company-operated restaurantsQ1 2018) ÷ Working capital
= (2,371,200 + 2,511,000 + 2,594,900 + 2,535,600) ÷ 1,079,700 = 9.27

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. McDonald’s Corp.’s working capital turnover deteriorated from Q2 2018 to Q3 2018 but then improved from Q3 2018 to Q4 2018 exceeding Q2 2018 level.

Average Inventory Processing Period

McDonald’s Corp., average inventory processing period calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data
Inventory turnover 161.76 203.33 180.47 180.75 177.03 207.30 211.55 217.25 215.60 144.55 153.89 147.26 139.63 143.35 141.76 150.56 138.98
Ratio (no. of days)
Average inventory processing period1 2 2 2 2 2 2 2 2 2 3 2 2 3 3 3 2 3

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 161.76 = 2

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.

Average Receivable Collection Period

McDonald’s Corp., average receivable collection period calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data
Receivables turnover 4.10 4.55 4.90 6.07 6.44 8.73 10.02 11.19 10.38 11.61 12.61 14.05 12.70 14.75 14.48 16.11 14.96
Ratio (no. of days)
Average receivable collection period1 89 80 74 60 57 42 36 33 35 31 29 26 29 25 25 23 24

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 4.10 = 89

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. McDonald’s Corp.’s average receivable collection period deteriorated from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.

Operating Cycle

McDonald’s Corp., operating cycle calculation (quarterly data)

No. of days

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data
Average inventory processing period 2 2 2 2 2 2 2 2 2 3 2 2 3 3 3 2 3
Average receivable collection period 89 80 74 60 57 42 36 33 35 31 29 26 29 25 25 23 24
Ratio
Operating cycle1 91 82 76 62 59 44 38 35 37 34 31 28 32 28 28 25 27

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 2 + 89 = 91

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period. McDonald’s Corp.’s operating cycle deteriorated from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.

Average Payables Payment Period

McDonald’s Corp., average payables payment period calculation (quarterly data)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data
Payables turnover 6.84 9.13 9.75 12.47 11.26 16.40 22.38 18.19 16.80 15.35 23.41 21.08 15.98 17.74 17.26 21.19 17.78
Ratio (no. of days)
Average payables payment period1 53 40 37 29 32 22 16 20 22 24 16 17 23 21 21 17 21

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 6.84 = 53

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. McDonald’s Corp.’s average payables payment period increased from Q2 2018 to Q3 2018 and from Q3 2018 to Q4 2018.

Cash Conversion Cycle

McDonald’s Corp., cash conversion cycle calculation (quarterly data)

No. of days

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
Selected Financial Data
Average inventory processing period 2 2 2 2 2 2 2 2 2 3 2 2 3 3 3 2 3
Average receivable collection period 89 80 74 60 57 42 36 33 35 31 29 26 29 25 25 23 24
Average payables payment period 53 40 37 29 32 22 16 20 22 24 16 17 23 21 21 17 21
Ratio
Cash conversion cycle1 38 42 39 33 27 22 22 15 15 10 15 11 9 7 7 8 6

Based on: 10-K (filing date: 2019-02-22), 10-Q (filing date: 2018-11-01), 10-Q (filing date: 2018-08-02), 10-Q (filing date: 2018-05-08), 10-K (filing date: 2018-02-23), 10-Q (filing date: 2017-11-02), 10-Q (filing date: 2017-08-08), 10-Q (filing date: 2017-05-08), 10-K (filing date: 2017-03-01), 10-Q (filing date: 2016-11-04), 10-Q (filing date: 2016-08-04), 10-Q (filing date: 2016-05-06), 10-K (filing date: 2016-02-25), 10-Q (filing date: 2015-11-04), 10-Q (filing date: 2015-08-05), 10-Q (filing date: 2015-05-07), 10-K (filing date: 2015-02-24), 10-Q (filing date: 2014-11-03), 10-Q (filing date: 2014-08-04), 10-Q (filing date: 2014-05-06).

Q4 2018 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 2 + 8953 = 38

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. McDonald’s Corp.’s cash conversion cycle deteriorated from Q2 2018 to Q3 2018 but then improved from Q3 2018 to Q4 2018 exceeding Q2 2018 level.