Mc Donalds

Key Performance Metrics

  • The review of Net Profit Margin witnessed a surging trend. The Net Profit Margin improved from 22.75% in 2017 to 32.49% in 2021.
  • The average EBIT Margin for the period under analysis was 41.8%, with 2020 and 2021 performing the worst and best, respectively.
  • In the current year, MC DONALDS was able to cover its interest liabilities 8.73 times in the current year- compared to 2017 when it was 10.37 times.
  • The Capital turnover stood at 0.48 times in 2021 from 0.78 in 2017, implying a low performance on Capital of the business in relation to revenue.

Profitability

  • The revenue of MC DONALDS has fluctuated year on year. The revenue decreased by 7.9% between 2017 and 2018 and a further 1.6% increase was recorded between 2018 and 2019. There also occurred a/an decrease/increase of 20.9% between 2020 and 2021 (the current period). 
  • MC DONALDS’s performance in profitability looks good as the return on capital employed also recorded good performance during the period of analysis.

Liquidity

  • The company’s result in liquidity looks strong, as current ratio/acid test increased from 1.01:1/1:1 to 1.78:1/1.76:1 on the last year. Which implies that the company has enough assets to settle its current liabilities.

Capital Structure

  • MC DONALDS is both equity and debt financed.
  • The debt-to-equity (D/E) ratio has been increasing year on year. The gearing position of the company appears to be high as it stood at 12.70 in the current year.

Source: MC DONALDS Annual Report

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