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 thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
U.S. federal 1,340,000 517,300 887,600 554,100 521,800
U.S. state 262,700 246,300 228,100 119,100 194,700
Outside the U.S. 1,137,100 1,230,100 895,300 730,600 1,126,500
Current tax provision 2,739,800 1,993,700 2,011,000 1,403,800 1,843,000
U.S. federal (146,000) (80,000) (177,400) 870,300 38,500
U.S. state (29,600) (46,200) (24,100) 73,300 20,000
Outside the U.S. (510,800) (219,500) (226,800) (937,200) 91,200
Deferred tax provision (benefit) (686,400) (345,700) (428,300) 6,400 149,700
Provision for income taxes 2,053,400 1,648,000 1,582,700 1,410,200 1,992,700

Based on: 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), 10-K (reporting date: 2019-12-31).

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 decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
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) increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
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 2021 to 2022 and from 2022 to 2023.

Effective Income Tax Rate (EITR)

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

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
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 1.80% 2.00% 1.80% 1.80% 1.80%
Foreign income taxed at different rates 1.90% 1.10% 0.90% 0.40% 1.60%
Tax impact of intercompany transactions -0.70% 0.20% 0.10% 2.10% 0.00%
Global intangible low-tax income (GILTI) 0.50% 0.40% 0.30% 1.20% 1.30%
Foreign-derived intangible income (FDII) -2.70% -4.20% -2.60% -3.40% -1.30%
U.S./Foreign tax law changes 0.00% 0.00% -3.90% -1.80% 0.00%
Nonoperating expense related to France audit settlement 0.00% 1.40% 0.00% 0.00% 0.00%
Foreign tax credit redetermination regulations 0.00% 0.00% 0.00% 0.00% -1.00%
Other, net -2.30% -0.80% -0.30% 1.70% 1.50%
Effective income tax rates 19.50% 21.10% 17.30% 23.00% 24.90%

Based on: 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), 10-K (reporting date: 2019-12-31).

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 increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Components of Deferred Tax Assets and Liabilities

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

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Lease liability 3,384,000 3,099,900 3,516,900 3,462,000 3,331,100
Intangible assets 3,018,200 2,658,900 2,524,600 2,095,900 1,051,000
Property and equipment 641,800 676,300 647,100 593,800 585,600
Deferred foreign tax credits 81,600 74,500 311,500 289,300 311,200
Employee benefit plans 191,600 180,600 153,600 190,800 192,300
Deferred revenue 166,900 165,800 121,400 154,800 145,500
Operating loss carryforwards 266,500 76,600 96,100 86,800 81,500
Other 281,000 267,400 284,400 449,000 323,600
Deferred tax assets before valuation allowance 8,031,600 7,200,000 7,655,600 7,322,400 6,021,800
Valuation allowance (1,149,800) (1,077,100) (1,076,100) (816,000) (741,900)
Deferred tax assets 6,881,800 6,122,900 6,579,500 6,506,400 5,279,900
Lease right-of-use asset (3,322,500) (3,045,000) (3,462,700) (3,427,300) (3,296,800)
Property and equipment (1,668,500) (1,706,300) (1,648,600) (1,600,400) (1,316,400)
Intangible liabilities (264,000) (296,700) (696,000) (1,046,200) (334,800)
Other (284,800) (595,400) (490,800) (322,400) (511,100)
Deferred tax liabilities (5,539,800) (5,643,400) (6,298,100) (6,396,300) (5,459,100)
Net deferred tax assets (liabilities) 1,342,000 479,500 281,400 110,100 (179,200)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
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 decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
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 2021 to 2022 and from 2022 to 2023.

Deferred Tax Assets and Liabilities, Classification

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

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Deferred tax assets (included in Other assets, miscellaneous) 3,022,900 2,477,000 2,357,000 2,135,700 1,138,900
Deferred tax liabilities 1,680,900 1,997,500 2,075,600 2,025,600 1,318,100

Based on: 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), 10-K (reporting date: 2019-12-31).

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 2021 to 2022 and from 2022 to 2023.
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 2021 to 2022 and from 2022 to 2023.

Adjustments to Financial Statements: Removal of Deferred Taxes

McDonald’s Corp., adjustments to financial statements

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 56,146,800 50,435,600 53,854,300 52,626,800 47,510,800
Less: Noncurrent deferred tax assets, net 3,022,900 2,477,000 2,357,000 2,135,700 1,138,900
Total assets (adjusted) 53,123,900 47,958,600 51,497,300 50,491,100 46,371,900
Adjustment to Total Liabilities
Total liabilities (as reported) 60,853,500 56,439,000 58,455,300 60,451,700 55,721,100
Less: Noncurrent deferred tax liabilities, net 1,680,900 1,997,500 2,075,600 2,025,600 1,318,100
Total liabilities (adjusted) 59,172,600 54,441,500 56,379,700 58,426,100 54,403,000
Adjustment to Shareholders’ Equity (deficit)
Shareholders’ equity (deficit) (as reported) (4,706,700) (6,003,400) (4,601,000) (7,824,900) (8,210,300)
Less: Net deferred tax assets (liabilities) 1,342,000 479,500 281,400 110,100 (179,200)
Shareholders’ equity (deficit) (adjusted) (6,048,700) (6,482,900) (4,882,400) (7,935,000) (8,031,100)
Adjustment to Net Income
Net income (as reported) 8,468,800 6,177,400 7,545,200 4,730,500 6,025,400
Add: Deferred income tax expense (benefit) (686,400) (345,700) (428,300) 6,400 149,700
Net income (adjusted) 7,782,400 5,831,700 7,116,900 4,736,900 6,175,100

Based on: 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), 10-K (reporting date: 2019-12-31).

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, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net Profit Margin
Reported net profit margin 33.22% 26.65% 32.49% 24.63% 28.59%
Adjusted net profit margin 30.53% 25.16% 30.65% 24.66% 29.30%
Total Asset Turnover
Reported total asset turnover 0.45 0.46 0.43 0.36 0.44
Adjusted total asset turnover 0.48 0.48 0.45 0.38 0.45
Financial Leverage
Reported financial leverage — — — — —
Adjusted financial leverage — — — — —
Return on Equity (ROE)
Reported ROE — — — — —
Adjusted ROE — — — — —
Return on Assets (ROA)
Reported ROA 15.08% 12.25% 14.01% 8.99% 12.68%
Adjusted ROA 14.65% 12.16% 13.82% 9.38% 13.32%

Based on: 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), 10-K (reporting date: 2019-12-31).

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 deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. McDonald’s Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. McDonald’s Corp. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

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

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income 8,468,800 6,177,400 7,545,200 4,730,500 6,025,400
Revenues 25,493,700 23,182,600 23,222,900 19,207,800 21,076,500
Profitability Ratio
Net profit margin1 33.22% 26.65% 32.49% 24.63% 28.59%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 7,782,400 5,831,700 7,116,900 4,736,900 6,175,100
Revenues 25,493,700 23,182,600 23,222,900 19,207,800 21,076,500
Profitability Ratio
Adjusted net profit margin2 30.53% 25.16% 30.65% 24.66% 29.30%

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 8,468,800 ÷ 25,493,700 = 33.22%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 7,782,400 ÷ 25,493,700 = 30.53%

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 deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Revenues 25,493,700 23,182,600 23,222,900 19,207,800 21,076,500
Total assets 56,146,800 50,435,600 53,854,300 52,626,800 47,510,800
Activity Ratio
Total asset turnover1 0.45 0.46 0.43 0.36 0.44
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Revenues 25,493,700 23,182,600 23,222,900 19,207,800 21,076,500
Adjusted total assets 53,123,900 47,958,600 51,497,300 50,491,100 46,371,900
Activity Ratio
Adjusted total asset turnover2 0.48 0.48 0.45 0.38 0.45

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 25,493,700 ÷ 56,146,800 = 0.45

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 25,493,700 ÷ 53,123,900 = 0.48

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 improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets 56,146,800 50,435,600 53,854,300 52,626,800 47,510,800
Shareholders’ equity (deficit) (4,706,700) (6,003,400) (4,601,000) (7,824,900) (8,210,300)
Solvency Ratio
Financial leverage1 — — — — —
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets 53,123,900 47,958,600 51,497,300 50,491,100 46,371,900
Adjusted shareholders’ equity (deficit) (6,048,700) (6,482,900) (4,882,400) (7,935,000) (8,031,100)
Solvency Ratio
Adjusted financial leverage2 — — — — —

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity (deficit)
= 56,146,800 ÷ -4,706,700 = —

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity (deficit)
= 53,123,900 ÷ -6,048,700 = —

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income 8,468,800 6,177,400 7,545,200 4,730,500 6,025,400
Shareholders’ equity (deficit) (4,706,700) (6,003,400) (4,601,000) (7,824,900) (8,210,300)
Profitability Ratio
ROE1 — — — — —
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 7,782,400 5,831,700 7,116,900 4,736,900 6,175,100
Adjusted shareholders’ equity (deficit) (6,048,700) (6,482,900) (4,882,400) (7,935,000) (8,031,100)
Profitability Ratio
Adjusted ROE2 — — — — —

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × 8,468,800 ÷ -4,706,700 = —

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity (deficit)
= 100 × 7,782,400 ÷ -6,048,700 = —

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income 8,468,800 6,177,400 7,545,200 4,730,500 6,025,400
Total assets 56,146,800 50,435,600 53,854,300 52,626,800 47,510,800
Profitability Ratio
ROA1 15.08% 12.25% 14.01% 8.99% 12.68%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 7,782,400 5,831,700 7,116,900 4,736,900 6,175,100
Adjusted total assets 53,123,900 47,958,600 51,497,300 50,491,100 46,371,900
Profitability Ratio
Adjusted ROA2 14.65% 12.16% 13.82% 9.38% 13.32%

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 8,468,800 ÷ 56,146,800 = 15.08%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 7,782,400 ÷ 53,123,900 = 14.65%

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 deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.