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McDonald's (XSGO:MCD) Interest Coverage : 8.48 (As of Sep. 2024)


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What is McDonald's Interest Coverage?

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 Sep. 2024 was $3,229 Mil. McDonald's's Interest Expense for the three months ended in Sep. 2024 was $-381 Mil. McDonald's's interest coverage for the quarter that ended in Sep. 2024 was 8.48. 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:

XSGO:MCD' s Interest Coverage Range Over the Past 10 Years
Min: 5.92   Med: 8.72   Max: 13.82
Current: 7.95


XSGO:MCD's Interest Coverage is ranked better than
54.62% of 260 companies
in the Restaurants industry
Industry Median: 6.8 vs XSGO:MCD: 7.95

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 Interest Coverage Chart

McDonald's Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Interest Coverage
Get a 7-Day Free Trial Premium Member Only Premium Member Only 7.98 5.92 8.33 8.57 8.63

McDonald's Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
Interest Coverage Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.33 7.87 7.31 8.12 8.48

Competitive Comparison of McDonald's's Interest Coverage

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's Interest Coverage Distribution in the Restaurants Industry

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 Sep. 2024 is calculated as

Here, for the three months ended in Sep. 2024, McDonald's's Interest Expense was $-381 Mil. Its Operating Income was $3,229 Mil. And its Long-Term Debt & Capital Lease Obligation was $52,147 Mil.

Interest Coverage=-1* Operating Income (Q: Sep. 2024 )/Interest Expense (Q: Sep. 2024 )
=-1*3229/-381
=8.48

* 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.

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


McDonald's  (XSGO: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 Business Description

Address
110 North Carpenter Street, Chicago, IL, USA, 60607
McDonald's is the largest restaurant owner-operator in the world, with 2023 system sales of $130 billion across nearly than 42,000 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.