Stock Analysis on Net
Stock Analysis on Net

McDonald’s Corp. (NYSE:MCD)

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

McDonald’s Corp., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
U.S. federal 1,412 1,340 517 888 554
U.S. state 269 263 246 228 119
Outside the U.S. 1,014 1,137 1,230 895 731
Current tax provision 2,695 2,740 1,994 2,011 1,404
U.S. federal (76) (146) (80) (177) 870
U.S. state (20) (30) (46) (24) 73
Outside the U.S. (478) (511) (220) (227) (937)
Deferred tax provision (benefit) (574) (686) (346) (428) 6
Provision for income taxes 2,121 2,053 1,648 1,583 1,410

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
Current tax provision Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. McDonald’s Corp. current tax provision increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.
Deferred tax provision (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. McDonald’s Corp. deferred tax provision (benefit) decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. McDonald’s Corp. provision for income taxes increased from 2022 to 2023 and from 2023 to 2024.

Effective Income Tax Rate (EITR)

McDonald’s Corp., effective income tax rate (EITR) reconciliation

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Statutory U.S. federal income tax rate 21.00% 21.00% 21.00% 21.00% 21.00%
State income taxes, net of related federal income tax benefit 1.90% 1.80% 2.00% 1.80% 1.80%
Foreign income taxed at different rates 2.40% 1.90% 1.10% 0.90% 0.40%
Tax impact of intercompany transactions -1.10% -0.70% 0.20% 0.10% 2.10%
Global intangible low-tax income (GILTI) 0.50% 0.50% 0.40% 0.30% 1.20%
Foreign-derived intangible income (FDII) -3.40% -2.70% -4.20% -2.60% -3.40%
U.S./Foreign tax law changes 0.00% 0.00% 0.00% -3.90% -1.80%
Nonoperating expense related to France audit settlement 0.00% 0.00% 1.40% 0.00% 0.00%
Other, net -0.80% -2.30% -0.80% -0.30% 1.70%
Effective income tax rates 20.50% 19.50% 21.10% 17.30% 23.00%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
Effective income tax rates Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. McDonald’s Corp. effective income tax rates decreased from 2022 to 2023 but then increased from 2023 to 2024 not reaching 2022 level.

Components of Deferred Tax Assets and Liabilities

McDonald’s Corp., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Lease liability 3,292 3,384 3,100 3,517 3,462
Intangible assets 3,495 3,018 2,659 2,525 2,096
Property and equipment 469 642 676 647 594
Deferred foreign tax credits 50 82 75 312 289
Employee benefit plans 168 192 181 154 191
Deferred revenue 113 167 166 121 155
Operating loss carryforwards 195 267 77 96 87
Other 169 281 267 284 449
Deferred tax assets before valuation allowance 7,951 8,032 7,200 7,656 7,322
Valuation allowance (917) (1,150) (1,077) (1,076) (816)
Deferred tax assets 7,034 6,882 6,123 6,580 6,506
Lease right-of-use asset (3,213) (3,323) (3,045) (3,463) (3,427)
Property and equipment (1,568) (1,669) (1,706) (1,649) (1,600)
Intangible liabilities (187) (264) (297) (696) (1,046)
Other (437) (285) (595) (491) (322)
Deferred tax liabilities (5,405) (5,540) (5,643) (6,298) (6,396)
Net deferred tax assets (liabilities) 1,629 1,342 480 281 110

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
Deferred tax assets before valuation allowance Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. McDonald’s Corp. deferred tax assets before valuation allowance increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.
Deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. McDonald’s Corp. deferred tax assets increased from 2022 to 2023 and from 2023 to 2024.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. McDonald’s Corp. net deferred tax assets (liabilities) increased from 2022 to 2023 and from 2023 to 2024.

Deferred Tax Assets and Liabilities, Classification

McDonald’s Corp., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Deferred tax assets (included in Other assets, miscellaneous) 3,543 3,023 2,477 2,357 2,136
Deferred tax liabilities 1,914 1,681 1,998 2,076 2,026

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
Deferred tax assets (included in Other assets, miscellaneous) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. McDonald’s Corp. deferred tax assets (included in Other assets, miscellaneous) increased from 2022 to 2023 and from 2023 to 2024.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. McDonald’s Corp. deferred tax liabilities decreased from 2022 to 2023 but then increased from 2023 to 2024 not reaching 2022 level.

Adjustments to Financial Statements: Removal of Deferred Taxes

McDonald’s Corp., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Adjustment to Total Assets
Total assets (as reported) 55,182 56,147 50,436 53,854 52,627
Less: Noncurrent deferred tax assets, net 3,543 3,023 2,477 2,357 2,136
Total assets (adjusted) 51,639 53,124 47,959 51,497 50,491
Adjustment to Total Liabilities
Total liabilities (as reported) 58,980 60,854 56,439 58,455 60,452
Less: Noncurrent deferred tax liabilities, net 1,914 1,681 1,998 2,076 2,026
Total liabilities (adjusted) 57,066 59,173 54,442 56,380 58,426
Adjustment to Shareholders’ Equity (deficit)
Shareholders’ equity (deficit) (as reported) (3,797) (4,707) (6,003) (4,601) (7,825)
Less: Net deferred tax assets (liabilities) 1,629 1,342 480 281 110
Shareholders’ equity (deficit) (adjusted) (5,426) (6,049) (6,483) (4,882) (7,935)
Adjustment to Net Income
Net income (as reported) 8,223 8,469 6,177 7,545 4,731
Add: Deferred income tax expense (benefit) (574) (686) (346) (428) 6
Net income (adjusted) 7,649 7,782 5,832 7,117 4,737

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

McDonald’s Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

McDonald’s Corp., adjusted financial ratios

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net Profit Margin
Reported net profit margin 31.72% 33.22% 26.65% 32.49% 24.63%
Adjusted net profit margin 29.51% 30.53% 25.16% 30.65% 24.66%
Total Asset Turnover
Reported total asset turnover 0.47 0.45 0.46 0.43 0.36
Adjusted total asset turnover 0.50 0.48 0.48 0.45 0.38
Financial Leverage
Reported financial leverage — — — — —
Adjusted financial leverage — — — — —
Return on Equity (ROE)
Reported ROE — — — — —
Adjusted ROE — — — — —
Return on Assets (ROA)
Reported ROA 14.90% 15.08% 12.25% 14.01% 8.99%
Adjusted ROA 14.81% 14.65% 12.16% 13.82% 9.38%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. McDonald’s Corp. adjusted net profit margin ratio improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. McDonald’s Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. McDonald’s Corp. adjusted ROA improved from 2022 to 2023 and from 2023 to 2024.

McDonald’s Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Net income 8,223 8,469 6,177 7,545 4,731
Revenues 25,920 25,494 23,183 23,223 19,208
Profitability Ratio
Net profit margin1 31.72% 33.22% 26.65% 32.49% 24.63%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 7,649 7,782 5,832 7,117 4,737
Revenues 25,920 25,494 23,183 23,223 19,208
Profitability Ratio
Adjusted net profit margin2 29.51% 30.53% 25.16% 30.65% 24.66%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 8,223 ÷ 25,920 = 31.72%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 7,649 ÷ 25,920 = 29.51%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. McDonald’s Corp. adjusted net profit margin ratio improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Revenues 25,920 25,494 23,183 23,223 19,208
Total assets 55,182 56,147 50,436 53,854 52,627
Activity Ratio
Total asset turnover1 0.47 0.45 0.46 0.43 0.36
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues 25,920 25,494 23,183 23,223 19,208
Adjusted total assets 51,639 53,124 47,959 51,497 50,491
Activity Ratio
Adjusted total asset turnover2 0.50 0.48 0.48 0.45 0.38

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 25,920 ÷ 55,182 = 0.47

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 25,920 ÷ 51,639 = 0.50

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. McDonald’s Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Total assets 55,182 56,147 50,436 53,854 52,627
Shareholders’ equity (deficit) (3,797) (4,707) (6,003) (4,601) (7,825)
Solvency Ratio
Financial leverage1 — — — — —
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 51,639 53,124 47,959 51,497 50,491
Adjusted shareholders’ equity (deficit) (5,426) (6,049) (6,483) (4,882) (7,935)
Solvency Ratio
Adjusted financial leverage2 — — — — —

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity (deficit)
= 55,182 ÷ -3,797 = —

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity (deficit)
= 51,639 ÷ -5,426 = —

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Net income 8,223 8,469 6,177 7,545 4,731
Shareholders’ equity (deficit) (3,797) (4,707) (6,003) (4,601) (7,825)
Profitability Ratio
ROE1 — — — — —
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 7,649 7,782 5,832 7,117 4,737
Adjusted shareholders’ equity (deficit) (5,426) (6,049) (6,483) (4,882) (7,935)
Profitability Ratio
Adjusted ROE2 — — — — —

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × 8,223 ÷ -3,797 = —

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity (deficit)
= 100 × 7,649 ÷ -5,426 = —

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Net income 8,223 8,469 6,177 7,545 4,731
Total assets 55,182 56,147 50,436 53,854 52,627
Profitability Ratio
ROA1 14.90% 15.08% 12.25% 14.01% 8.99%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 7,649 7,782 5,832 7,117 4,737
Adjusted total assets 51,639 53,124 47,959 51,497 50,491
Profitability Ratio
Adjusted ROA2 14.81% 14.65% 12.16% 13.82% 9.38%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 8,223 ÷ 55,182 = 14.90%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 7,649 ÷ 51,639 = 14.81%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. McDonald’s Corp. adjusted ROA improved from 2022 to 2023 and from 2023 to 2024.