McDonald’s Corp. (NYSE:MCD)

Inventory Turnover

The inventory turnover ratio has demonstrated notable fluctuations over the analyzed periods, ranging from a low of 141.94 to a high of 183.32. Early values show a peak in mid-2022, followed by a general decline towards the end of 2022. Although there is a recovery in early 2023 and mid-2024, the latter periods indicate a decline again, suggesting variable efficiency in inventory management.

Receivables Turnover

The receivables turnover ratio remained relatively stable with minor volatility. It reached a peak of 5.93 in the first quarter of 2022, but subsequently declined, falling under 4 by the third quarter of 2025. This downward trend indicates a lengthening of the collection period and possibly slower cash inflows from receivables over time.

Payables Turnover

Payables turnover showed a decreasing trend after a peak at 11.4 in the first quarter of 2022. The ratio generally declined into the later periods, reaching a low around 7.46 near the end of 2023, before modest recovery to values near 9.7 by mid-2025. This decline suggests that the company took longer to settle its payables during some periods, potentially impacting its cash outflow timing.

Working Capital Turnover

This ratio experienced considerable volatility, with an extreme peak of 33.38 in mid-2024 contrasting with low values typically below 10 in most other quarters. Such inconsistent performance indicates fluctuating efficiency in using working capital to generate sales, which may be due to changing operational or financial strategies within the company.

Average Inventory Processing Period

Consistently low and stable, the inventory processing days mostly remained between 2 and 3 days throughout the entire period. This stability reflects effective and steady inventory management practices over time.

Average Receivable Collection Period

The average receivable collection period demonstrated a gradual increase from 62 days in early 2022 to as high as 97 days by mid-2025. This increasing trend corresponds with the declining receivables turnover and indicates that the company is taking longer to collect payments from customers, which could impact liquidity.

Operating Cycle

The operating cycle showed a parallel upward trend, rising from 64 days in early 2022 to nearly 100 days in mid-2025. This increase results from lengthening receivable collection periods combined with steady inventory processing days, implying that cash is tied up in operations for a longer duration.

Average Payables Payment Period

The average payables payment period fluctuated between the low 30s and high 40s days over the examined timeframe. Notably, the period was shorter around early 2022, increased towards the end of 2022 and 2023, then decreased again by mid-2025. These fluctuations suggest variable timing in settling obligations, which may be tied to operational cash flow management.

Cash Conversion Cycle

The cash conversion cycle exhibits an increasing trend, starting at 27 days near the end of 2021, rising to over 60 days by mid-2025. This lengthening cycle reflects slower overall conversion of investments in inventory and receivables back into cash, indicating potential pressure on liquidity and working capital efficiency.

Company-owned and operated restaurant expenses

The expenses exhibit some fluctuation over the periods analyzed. Initially, there is a rise from $1,818 million in the first quarter of 2021 to a peak of $2,108 million in the third quarter of 2021. This is followed by a slight decline towards the end of 2021 and a more pronounced decrease through mid-2022, reaching a low of $1,770 million in the second quarter of 2022. Expenses then recover somewhat towards the end of 2022 and show a generally increasing trend with periodic fluctuations throughout 2023 and 2024. The expenses peak again at $2,248 million in the third quarter of 2024 before experiencing declines in subsequent quarters. By the second quarter of 2025, expenses again rise to $2,078 million. Overall, the expense pattern reflects seasonal and operational variability with cyclical highs and lows within a range roughly between $1,770 million and $2,248 million.

Inventories, at cost, not in excess of market

Inventory levels demonstrate moderate variation with values generally fluctuating between $43 million and $56 million throughout the period. There is a gradual increase from $45 million in early 2021 to a peak of $56 million in the fourth quarter of 2024. Periodic declines occur, such as in the middle of 2022 and mid-2023, but the overall trend suggests a controlled and relatively stable inventory management, maintaining consistent inventory turnover with minor increases toward the later periods.

Inventory turnover

The inventory turnover ratio shows considerable volatility, indicating variations in the efficiency of inventory management. The ratio starts at a high level of 155.54 in the first quarter of 2021, reaching peaks above 180 in multiple periods (e.g., second quarter of 2022, first quarter of 2024). Notably, sharper declines occur in late 2021 and late 2022, dipping below 150 in some quarters, which suggests slower inventory movement during these times. The turnover ratio remains relatively strong overall, with a tendency to fluctuate between approximately 140 and 181, reflecting varying product demand and possibly changes in operational efficiency or supply chain timing across quarters.

Sales by Company-owned and operated restaurants

The quarterly sales figures exhibit fluctuations across the examined periods. Early in the timeline, sales increased from 2,162 million USD in March 2021, peaking at 2,598 million USD by September 2021, before declining slightly towards year-end 2021. Throughout 2022, sales showed a downward trend, reaching a low point of 2,113 million USD in June 2022, followed by modest recovery phases that did not surpass previous highs. In 2023, a recovery trend is observed with sales rising to 2,556 million USD in September but then again decreasing towards the end of the year. For 2024, sales rose substantially in the third quarter to 2,656 million USD, marking the highest sales recorded in this span, before declining sharply again by the end of the year and into the early 2025 quarters. Overall, sales demonstrate considerable volatility with a lack of consistent growth or decline over the periods.

Accounts and notes receivable

The receivables figures generally show an upward trend over time. Beginning at 1,734 million USD in March 2021, receivables increased steadily, with some periods of faster growth—most notably an acceleration from December 2021 through December 2023, culminating at 2,488 million USD. Following this peak, receivables levels remained high with slight fluctuations but largely maintained an upward trajectory into mid-2025, reaching 2,550 million USD as of June 2025. This rising trend in receivables indicates growing outstanding amounts owed to the company, which might reflect increased sales credit terms or slower collections.

Receivables turnover ratio

The receivables turnover ratio, which indicates the efficiency of collecting receivables, shows a downward trend across the timeline. Initially rising from 4.77 in March 2021 to a peak of 5.93 in March 2022, there is a subsequent consistent decline through to June 2025, where it reaches the lowest value of 3.75. This decrease suggests a worsening in collection efficiency, with receivables being converted to cash more slowly over time. The decline in turnover ratio aligns with the increasing receivables balance, reinforcing the observation of slower collections or extended credit periods to customers.

Summary

The data reflect volatility in company-owned restaurant sales, with multiple cycles of increases and decreases rather than stable growth. At the same time, receivables have steadily increased, while receivables turnover has declined, suggesting challenges in collecting outstanding amounts promptly. These trends may point to evolving credit policies or changes in customer payment behavior, which could impact cash flow. Collectively, the patterns indicate a need for focused management attention on sales consistency and receivables management to improve financial stability and operational efficiency.

Company-Owned and Operated Restaurant Expenses

Over the observed periods, expenses exhibited notable fluctuations. Initially, there was a general increasing trend from early 2021 through the third quarter of 2021, peaking near the end of that year. This was followed by a decline in mid-2022, reaching a trough around the middle quarters of 2022. Subsequently, expenses rose again toward the latter part of 2022 and early 2023, with several ups and downs continuing into 2024 and 2025. The pattern indicates cyclical variations possibly linked to seasonal or operational factors, with no sustained long-term trend of either growth or reduction. The magnitude of expenses remained within a range approximately between $1,700 million and $2,250 million, indicating relative stability in restaurant operating costs despite periodic volatility.

Accounts Payable

Accounts payable values showed a general increasing trend from the first quarter of 2021 through to the final quarter of 2021, reaching a peak near the end of that year. During 2022, payables fluctuated but maintained relatively high levels before another increase in late 2022 and early 2023. After this period, accounts payable presented some variability through 2023 and 2024, with a slight downward tendency toward mid-2025. The overall pattern suggests some seasonal or operational influences affecting payment obligations, but the upward movement during key periods could reflect increased procurement or extended payment terms.

Payables Turnover Ratio

The payables turnover ratio demonstrated a declining trend from early 2021, dropping significantly toward the end of that year. This reduction suggests slower turnover of payables, indicating extended payment periods or slower cycling of obligations. Although turnover improved somewhat during the first half of 2022, it experienced repeated declines at each year-end. Throughout 2023 and into 2024 and 2025, the ratio remained generally lower than the initial levels in 2021 but showed intermittent recovery. The fluctuation in turnover ratio points to variability in payment efficiency or credit terms over time and could imply changing vendor relations or internal cash management strategies.

The data shows varying trends across the key financial metrics over the reported quarters.

Working Capital

Working capital exhibits notable volatility throughout the periods. Initial growth is observed from 888 million to a peak of 3129 million by the end of 2021, followed by fluctuations including sharp declines and recoveries in subsequent years. A significant negative working capital is recorded in March 2024 at -829 million, and again more pronounced in September 2024 at -1396 million, indicative of potential liquidity stress during these quarters. However, a recovery trend is seen in later periods with positive values returning and stabilizing above 700 million.

Sales by Company-owned and Operated Restaurants

Sales show relatively consistent performance with modest fluctuations. Sales initially rise from 2162 million in March 2021 to near 2598 million by September 2021, followed by a slight decrease and a pattern of ups and downs around an average level close to 2300-2600 million. The data reflects seasonality with some peaks towards the fourth quarter of most years, but no significant growth trend is sustained over the mid to long term.

Working Capital Turnover

The working capital turnover ratio demonstrates substantial variability. Early periods show turnover ratios declining from 9.32 to 3.13 by the end of 2021, which corresponds to increasing working capital levels. Subsequently, the ratio spikes dramatically in March 2022 (23.54) and June 2024 (33.38), likely reflecting the sharp decreases or negative working capital during these quarters. Such high turnover ratios suggest efficient sales generation relative to working capital in these periods but may also signal volatility and underlying operational or financial instability.

In conclusion, the analysis reveals a working capital position subject to considerable swings and occasional negatives, indicating liquidity management challenges. Sales remain relatively steady without strong growth trajectories. The working capital turnover ratio’s fluctuations echo these dynamics, highlighting periods of both efficient capital use and potential financial strain. These insights suggest a focus is needed on stabilizing working capital to support more consistent operational performance.

The inventory turnover ratio exhibits fluctuations over the observed periods, with values ranging approximately from 141.94 to 183.32. Notably, there is an initial increase from the first quarter of 2021 through the mid part of 2022, reaching a peak near mid-2022. This is followed by a decline toward the end of 2022, after which the ratio experiences several oscillations but remains generally high, maintaining values mostly above 140. The highest recorded turnover ratio appears around mid-2022 and again in early 2024, suggesting periods of enhanced efficiency in inventory management.

In contrast, the average inventory processing period remains remarkably stable throughout the entire timeline. It consistently hovers between 2 and 3 days, indicating a steady rate at which inventory is processed regardless of fluctuations seen in the turnover ratio. Specifically, the processing period mostly stays at 2 days, with occasional short increments to 3 days but no significant upward or downward trend.

Inventory Turnover Ratio

Shows variability with notable peaks in mid-2022 and early 2024.

Generally indicates efficiency in inventory utilization, though fluctuations suggest periodic changes in demand or inventory control strategies.

The ratio remains above 140 consistently, reflecting high turnover.

Average Inventory Processing Period

Remains stable between 2 to 3 days throughout the analyzed period.

No significant positive or negative trend, suggesting consistent inventory processing routines.

The analysis of the receivables turnover ratio and the average receivable collection period reveals notable shifts in the company's efficiency in managing its receivables over the observed quarters.

Receivables Turnover Ratio

The receivables turnover ratio initially increased from 4.77 in March 2021 to a peak of 5.93 in March 2022, indicating an improvement in the frequency of collection during this period. However, following this peak, a general declining trend is evident. The ratio decreased steadily to 4.14 by December 2021 and continued to fall further to 3.75 by June 2025. This declining turnover suggests a reduction in collection efficiency or slower payment by customers over time.

Average Receivable Collection Period

Correspondingly, the average receivable collection period shows an inverse pattern relative to the turnover ratio. Initially, the collection period decreased from 76 days in March 2021 to 62 days by March 2022, reflecting quicker collections and improved credit management. Subsequently, the collection period gradually increased, reaching 88 days by December 2021 and continuing to rise to 97 days by June 2025. This indicates that, on average, receivables are being collected more slowly over the later periods.

Overall Trends and Insights

The early part of the observed timeline shows an enhancement in receivables management, with faster turnover and shorter collection periods, which generally signifies stronger liquidity and operational efficiency. However, the latter periods illustrate a clear reversal with deteriorating turnover rates and lengthening collection periods. This trend may reflect changing credit policies, market conditions, or customer payment behavior that could warrant further investigation to mitigate potential cash flow risks.

Average Inventory Processing Period

The average inventory processing period has remained relatively stable over the observed quarters, fluctuating mainly between 2 and 3 days. Notably, there were slight increases to 3 days at the end of 2021 and again at the end of 2022, but the period returned to 2 days in subsequent quarters. The consistency in this metric suggests effective inventory management without significant delays in processing inventory.

Average Receivable Collection Period

The average receivable collection period exhibits a general upward trend over time. It began at 76 days in March 2021, decreased to a low of 62 days by March 2022, and subsequently increased steadily, reaching 97 days by June 2025. This indicates that the company is taking longer to collect receivables from customers as time progresses. The increase in collection days could point to potential challenges in credit management or changes in customer payment behavior.

Operating Cycle

The operating cycle followed a similar pattern to the average receivable collection period. It started at 78 days in March 2021, decreased to a low of 64 days by March 2022, and then generally increased over subsequent quarters, peaking at 99 days in June 2025. The rise in the operating cycle reflects the longer receivable collection periods and, to a lesser extent, stable inventory processing times. The expanding operating cycle indicates that the total time taken from inventory acquisition to cash collection is lengthening, which may impact liquidity and working capital needs.

Summary

Overall, the data reveals stable inventory handling durations but a significant increase in the time taken to collect receivables over the analyzed period. Consequently, the operating cycle is expanding, which could suggest a deterioration in cash flow timing and higher working capital requirements. Monitoring and optimizing receivable collection processes may be necessary to mitigate these trends and maintain efficient operational liquidity.

Payables Turnover Ratio

The payables turnover ratio exhibits notable fluctuations over the reported periods. Initially, the ratio remained relatively stable around 10.4 to 10.5 from early 2021 until the third quarter but experienced a sharp decline to approximately 7.5 by the end of 2021. Following this dip, a recovery phase occurred with values returning to the 9.0 to 11.4 range throughout 2022 and 2023, albeit without attaining the early 2021 peak levels. In the most recent quarters, the ratio stabilized between roughly 8.1 and 9.7, indicating a moderate rate of paying off suppliers compared to the beginning of the period.

Average Payables Payment Period (Days)

The average payment period inversely mirrors the pattern observed in the payables turnover ratio. It started at 35 days in early 2021, then progressively lengthened to nearly 46-49 days at the end of 2021 and in the fourth quarter of 2022. This suggests slower payment cycles during those intervals. Subsequently, the payment period shortened to around 37 to 42 days in 2023 and through mid-2025, indicating a return toward quicker settlement of payables, yet still generally longer than the initial period in 2021.

Insights and Trends

The data portrays a cyclic pattern of payment efficiency. The initial phase shows relatively high turnover and corresponding shorter payment periods, pointing to brisk payment practices. The end of 2021 and late 2022 reveal a period of decreased turnover and extended payment durations, possibly reflecting changes in supplier payment policies, cash flow management adjustments, or external economic factors influencing liquidity. From 2023 onward, both metrics suggest a gradual normalization with moderate payables turnover and payment periods stabilizing at levels somewhat between the early and late observations in the dataset. This indicates increased consistency in accounts payable management during the most recent years.

Inventory Management

The average inventory processing period remained relatively stable over the analyzed periods, fluctuating between 2 and 3 days. This consistency suggests effective inventory turnover and minimal delays in processing inventory throughout the quarters.

Receivables Collection

The average receivable collection period showed noticeable volatility with values ranging from a low of 62 days to a high of 97 days. Starting at 76 days in early 2021, the period improved to 62 days by March 2022 but then increased steadily to peak around 97 days by mid-2025. This trend indicates a gradual slowing in the collection efficiency, which could impact cash inflows if not addressed.

Payables Payment

The average payables payment period varied between 32 and 49 days. Early in the period, the company maintained payment cycles around the mid-30s days, but there were increases notably at year-end quarters, peaking at 49 days. By mid-2025, the payment period had decreased to around 37 days, suggesting an effort to manage creditor payments more promptly.

Cash Conversion Cycle

The cash conversion cycle (CCC) displayed fluctuations, moving between 27 and 62 days. Initially decreasing from 43 days in early 2021 to a low of 27 days at the end of 2021, the CCC then gradually increased, reaching a peak of 62 days by mid-2025. This increasing trend in CCC indicates a lengthening delay between cash outlays and cash inflows, primarily driven by elongating receivables collection and fluctuating payables payment periods, while inventory management remained stable.

Overall Insights

The inventory process efficiency remained consistent throughout, but the receivables collection period has generally worsened over time, which adversely affects liquidity. Meanwhile, payables payment periods fluctuated but showed some improvement towards the end of the analyzed timeframe. The increasing cash conversion cycle underscores potential challenges in working capital management, highlighting the need for strategies to enhance receivables collection and control payment timings to maintain cash flow stability.