McDonald's (McDonald's) Operating Income : $11,746 Mil (TTM As of Dec. 2023)

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What is McDonald's Operating Income?

McDonald's's Operating Income for the three months ended in Dec. 2023 was $2,833 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Dec. 2023 was $11,746 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. McDonald's's Operating Income for the three months ended in Dec. 2023 was $2,833 Mil. McDonald's's Revenue for the three months ended in Dec. 2023 was $6,406 Mil. Therefore, McDonald's's Operating Margin % for the quarter that ended in Dec. 2023 was 44.22%.

Good Sign:

McDonald's Corp operating margin is expanding. Margin expansion is usually a good sign.

McDonald's's 5-Year average Growth Rate for Operating Margin % was 2.70% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. McDonald's's annualized ROC % for the quarter that ended in Dec. 2023 was 18.95%. McDonald's's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2023 was 30.83%.

McDonald's Operating Income Historical Data

The historical data trend for McDonald's's Operating Income 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.

* Premium members only.

McDonald's Operating Income Chart

McDonald's Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Operating Income

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8,950.00

7,206.50

9,872.70

10,344.60

11,745.60

McDonald's Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Operating Income	Get a 7-Day Free Trial															2,597.20	2,661.00	3,068.30	3,183.50	2,832.80

McDonald's Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Dec. 2023 adds up the quarterly data reported by the company within the most recent 12 months, which was $11,746 Mil.

McDonald's (NYSE:MCD) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

McDonald's's annualized ROC % for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	11331.2 * ( 1 - 18.93% )	/	( (45907.4	+	51040.9)	/ 2 )
=	9186.20384	/	48474.15
=	18.95 %

where

	Invested Capital		(Q: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	52089.3	-	3334.6	-	( 3496.3	-	max(0, 4002.7	-	6850	+	3496.3	))
=	45907.4

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	56146.8	-	3978.5	-	( 4579.3	-	max(0, 6859	-	7986.4	+	4579.3	))
=	51040.9

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

2. Joel Greenblatt's definition of Return on Capital:

McDonald's's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2023 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Dec. 2023 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Sep. 2023		Q: Dec. 2023
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	11500.8	/	( ( (36173.6 + max(19.1, 0))	+	(38422 + max(-571.4, 0)) )	/	2 )
=	11500.8	/	( ( 36192.7	+	38422 )	/	2 )
=	11500.8	/	37307.35
=	30.83 %

where Working Capital is:

	Working Capital		(Q: Sep. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(2247.1	+	47.6	+	1059)	-	(3334.6	+	0	+	0)
=	19.1

	Working Capital		(Q: Dec. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(2488	+	52.8	+	866.3)	-	(3978.5	+	0	+	0)
=	-571.4

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Dec. 2023) EBIT data.

3. Operating Income is also linked to Operating Margin %:

McDonald's's Operating Margin % for the quarter that ended in Dec. 2023 is calculated as:

Operating Margin %	=	Operating Income (Q: Dec. 2023 )	/	Revenue (Q: Dec. 2023 )
	=	2832.8	/	6406.2
	=	44.22 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

McDonald's Operating Income 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 » Operating Income

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