🍔 What the Company Does
McDonald’s Corporation operates one of the world’s largest global restaurant systems, with locations in more than 100 countries. Its core strength is a franchise-based business model, where most restaurants are owned and operated by independent franchisees. McDonald’s primarily earns money through rent, royalties, and franchise fees, rather than directly selling food at every location.
📊 Financial Highlights
- Revenue remained stable in FY2024 at around $26B, reflecting the mature nature of the business.
- Net income stayed strong at over $8B, although slightly lower than FY2023 due to higher interest and other non-operating costs.
- Margins remained robust, supported by the high-margin franchise model.
- Operating cash flow exceeded $9B, showing that the core business continues to generate reliable cash.
⚠️ Key Risks
- Global execution risk – operating across many countries increases regulatory, cultural, and operational complexity.
- Franchise dependence – performance depends heavily on franchisee health and alignment with corporate strategy.
- Food safety and supply chain risk – disruptions or incidents could damage brand trust and sales.
- Technology and cybersecurity risk – outages or data breaches can disrupt restaurant operations and customer experience.
🧭 Management’s Discussion (MD&A)
Management emphasized continued execution of its long-term growth strategy focused on menu innovation, digital channels, delivery, and restaurant development. Performance in FY2024 reflected steady comparable sales, disciplined cost management, and strong systemwide sales. Management also highlighted ongoing capital returns to shareholders through dividends and share repurchases, supported by consistent cash generation.
🧠 Takeaway for Beginners
McDonald’s is not a high-growth company, but a stable, cash-generating global business. Its franchise-heavy model supports strong margins and predictable cash flow, even when growth slows. For beginner investors, McDonald’s stands out as a mature company that prioritizes profitability, resilience, and shareholder returns rather than rapid expansion.
Income Statement Summary
| Income Statement Summary ($m, EPS in $) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenue | 23,183 | 25,494 | 25,920 |
| Cost of Goods Sold | 9,975 | 10,931 | 11,210 |
| Gross Profit | 13,207 | 14,564 | 14,710 |
| SG&A | 2,862 | 2,817 | 2,859 |
| Operating Income | 9,371 | 11,647 | 11,712 |
| Non-Operating Income/Expense | 339 | (236) | (139) |
| Interest Income/Expense | (1,207) | (1,361) | (1,506) |
| Income Before Tax | 7,825 | 10,522 | 10,345 |
| Income Tax | 1,648 | 2,053 | 2,121 |
| Net Income | 6,177 | 8,469 | 8,223 |
| EPS (diluted, $) | 8.3 | 11.6 | 11.4 |
Beginner note: FY2024 revenue was higher than FY2023, while net income was slightly lower. That combination usually means costs, interest, taxes, or non-operating items offset part of the operating improvement.
Note: McDonald’s cost structure differs from traditional manufacturers, as a large portion of revenue comes from franchised restaurants rather than company-operated sales.
Key Financial Ratios
| Ratio | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| ROE (%) | — | — | — |
| ROA (%) | 11.8 | 15.9 | 14.8 |
| ROTC (%) | — | — | — |
| ROIC (%) | — | — | — |
| Gross Margin (%) | 57.0 | 57.1 | 56.7 |
| Operating Margin (%) | 40.4 | 45.7 | 45.2 |
| Pretax Margin (%) | 33.7 | 41.3 | 39.9 |
| Net Margin (%) | 26.6 | 33.2 | 31.7 |
| Debt-to-Equity (D/E) (%) | — | — | — |
| Net Debt / EBITDA (x) | 2.4 | 2.5 | 2.6 |
| Interest Coverage (x) | 7.8 | 8.6 | 7.8 |
| Current Ratio (%) | 142.7 | 116.4 | 119.1 |
| Quick Ratio (%) | 123.6 | 103.0 | 89.8 |
| Fixed Asset to Long-term Capital (%) | — | — | — |
- Why ROE and D/E are shown as “—”: McDonald’s reports negative total equity (a deficit), largely driven by large treasury stock balances and long-term capital structure choices, which makes ROE and debt-to-equity not meaningful in the usual sense.
- Quick ratio method: calculated as (Cash + Receivables) / Current Liabilities. It is a simplified quick ratio because full “quick assets” detail is not always presented as a single standardized line item.
Balance Sheet Snapshot
| Balance Sheet Summary ($m) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Assets | |||
| Cash & Equivalents | 2,584 | 4,579 | 1,085 |
| Accounts Receivable | 2,115 | 2,488 | 2,383 |
| Inventory | 52 | 53 | 56 |
| Current Assets | 5,424 | 7,986 | 4,599 |
| Property, Plant & Equipment | 23,774 | 24,908 | 25,295 |
| Intangible Assets | 2,900 | 3,040 | 3,145 |
| Non-current Assets | 45,011 | 48,161 | 50,583 |
| Total Assets | 50,436 | 56,147 | 55,182 |
| Liabilities | |||
| Short-term Debt | 0 | 2,192 | 0 |
| Accounts Payable | 980 | 1,103 | 1,029 |
| Current Liabilities | 3,802 | 6,859 | 3,861 |
| Long-term Debt | 35,904 | 37,153 | 38,424 |
| Non-current Liabilities | 52,637 | 53,995 | 55,118 |
| Total Liabilities | 56,439 | 60,854 | 58,979 |
| Equity | |||
| Common Equity | (6,003) | (4,707) | (3,797) |
| Total Liabilities + Equity | 50,436 | 56,147 | 55,182 |
Beginner note: Even with a reported equity deficit, the company can still be highly profitable and cash-generative. For McDonald’s, the balance sheet presentation is heavily influenced by long-term debt, leases, and share repurchases.
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 McDonald’s (MCD) 2024 10-K Analysis (Filed 2025) | Explained for Beginners