McDonald's (McDonald's) Interest Coverage

: 7.86 (As of Dec. 2023)

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Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income by its Interest Expense. McDonald's's Operating Income for the three months ended in Dec. 2023 was $2,833 Mil. McDonald's's Interest Expense for the three months ended in Dec. 2023 was $-360 Mil. McDonald's's interest coverage for the quarter that ended in Dec. 2023 was 7.86. The higher the ratio, the stronger the company's financial strength is.

The historical rank and industry rank for McDonald's's Interest Coverage or its related term are showing as below:

MCD' s Interest Coverage Range Over the Past 10 Years
Min: 5.92 Med: 8.72 Max: 13.82
Current: 8.63

MCD's Interest Coverage is ranked better than
55.08% of 256 companies
in the Restaurants industry
Industry Median: 6.835 vs MCD: 8.63

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

McDonald's Interest Coverage Historical Data

The historical data trend for McDonald's's Interest Coverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Note: For Interest Coverage, "No debt" indicates no long-term debt. An indication of "No Debt" does not necessarily mean that the company has no long-term debt obligations; it could be due to missing data in the quarterly or annual report. Use caution when interpreting this information.

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McDonald's Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Interest Coverage

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7.98

5.92

8.33

8.57

8.63

McDonald's Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Interest Coverage	Get a 7-Day Free Trial															8.04	8.07	9.29	9.34	7.86

Competitive Comparison

For the Restaurants subindustry, McDonald's's Interest Coverage, along with its competitors' market caps and Interest Coverage data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

McDonald's Interest Coverage Distribution

For the Restaurants industry and Consumer Cyclical sector, McDonald's's Interest Coverage distribution charts can be found below:

* The bar in red indicates where McDonald's's Interest Coverage falls into.

McDonald's Interest Coverage Calculation

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

If Interest Expense is negative and Operating Income is positive, then

Interest Coverage

-1

Operating Income

Interest Expense

Else if Interest Expense is negative and Operating Income is negative, then

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt & Capital Lease Obligation is 0, then

The company had no debt ⁽¹⁾.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

McDonald's's Interest Coverage for the fiscal year that ended in Dec. 2023 is calculated as

Here, for the fiscal year that ended in Dec. 2023, McDonald's's Interest Expense was $-1,361 Mil. Its Operating Income was $11,746 Mil. And its Long-Term Debt & Capital Lease Obligation was $50,211 Mil.

Interest Coverage	=	-1	*	Operating Income (A: Dec. 2023 )	/	Interest Expense (A: Dec. 2023 )
	=	-1	*	11745.6	/	-1360.8
	=	8.63

McDonald's's Interest Coverage for the quarter that ended in Dec. 2023 is calculated as

Here, for the three months ended in Dec. 2023, McDonald's's Interest Expense was $-360 Mil. Its Operating Income was $2,833 Mil. And its Long-Term Debt & Capital Lease Obligation was $50,211 Mil.

Interest Coverage	=	-1	*	Operating Income (Q: Dec. 2023 )	/	Interest Expense (Q: Dec. 2023 )
	=	-1	*	2832.8	/	-360.2
	=	7.86

The higher the ratio, the stronger the company's Financial Strength is.

McDonald's (NYSE:MCD) Interest Coverage Explanation

Ben Graham requires that a company has a minimum interest coverage of 5 with the companies he invested. If the interest coverage is less than 2, the company is burdened by debt. Any business slow or recession may drag the company into a situation where it cannot pay the interest on its debt.

Interest Coverage is an important factor when GuruFocus ranks a company's overage Financial Strength .

McDonald's Interest Coverage Related Terms

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McDonald's (McDonald's) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Restaurants » McDonald's Corp (NYSE:MCD) » Definitions » Interest Coverage

Comparable Companies

Traded in Other Exchanges

MCD:Mexico 1MCD:Italy MDOd:UK 0R16:UK MDO0:Germany MDO:Germany MDO:Germany MDO:Germany MDO:Germany MCDS:Canada MCDC34:Brazil MCD:Austria MCD:Argentina

Address

110 North Carpenter Street, Chicago, IL, USA, 60607

Website

https://www.investor.mcdonalds.com

McDonald's is the largest restaurant owner-operator in the world, with 2022 system sales of $116 billion across more than 40,000 stores and 115 markets. McDonald's pioneered the franchise model, building its footprint through partnerships with independent restaurant franchisees and master franchise partners around the globe. The firm earns roughly 60% of its revenue from franchise royalty fees and lease payments, with most of the remainder coming from company-operated stores across its three core segments: the United States, internationally operated markets, and international developmental/licensed markets.

Executives

Heidi B Capozzi	officer: EVP - Chief People Officer	C/O THE BOEING COMPANY, 100 RIVERSIDE PLAZA, CHICAGO IL 60606-1596
Joseph M. Erlinger	officer: President, McDonald's USA	MCDONALD'S CORPORATION, 110 NORTH CARPENTER STREET, CHICAGO IL 60607
Marion K. Gross	officer: EVP-Chief Supply Chain Officer	MCDONALD'S CORPORATION, 110 NORTH CARPENTER STREET, CHICAGO IL 60607
Christopher J Kempczinski	director, officer: President and CEO	THREE LAKES DRIVE, NORTHFIELD IL 60093
Brian S Rice	officer: EVP-Global Chief Info. Officer	7000 CARDINAL PLACE, DUBLIN OH 43017
Edith Morgan Flatley	officer: EVP - Global CMO	MCDONALD'S CORPORATION, 110 NORTH CARPENTER STREET, CHICAGO IL 60607
Ian Frederick Borden	officer: EVP & CFO	MCDONALD'S CORPORATION, 110 NORTH CARPENTER STREET, CHICAGO IL 60607
Enrique Jr Hernandez	director, other: Non-Exec Chairman of the Board	INTER-CON SECURITY SYSTEMS, INC., 210 SOUTH DELACEY AVENUE, PASADENA CA 91105
Desiree Ralls-morrison	officer: EVP, Chief Legal Off. and Sec.	C/O BOSTON SCIENTIFIC CORPORATION, 300 BOSTON SCIENTIFIC WAY, MARLBOROUGH MA 01752
Manuel Jm Steijaert	officer: EVP - Chief Customer Officer	110 NORTH CARPENTER STREET, CHICAGO IL 60607
Jo Sempels	officer: President, IDL	MCDONALD'S CORPORATION, 110 NORTH CARPENTER STREET, CHICAGO IL 60607
Catherine A. Hoovel	officer: SVP - Corporate Controller	MCDONALD'S CORPORATION, 110 NORTH CARPENTER STREET, CHICAGO IL 60607
Catherine M. Engelbert	director	110 NORTH CARPENTER STREET, CHICAGO IL 60607
Rogers John W Jr	director	ARIEL CAPITAL MANAGEMENT, INC., 200 EAST RANDOLPH DRIVE, SUITE 2900, CHICAGO IL 60601
Jennifer L Taubert	director	JOHNSON & JOHNSON, ONE JOHNSON & JOHNSON PLAZA, NEW BRUNSWICK NJ 08933