McDonald’s FY25 Income Statement
In millions, except per share data
| Item | Q4 2025 | Q4 2024 | yoy | % of Total Rev (2025 Q4) |
| Revenues from franchised restaurants | 4311 | 3958 | 9% | 61.5% |
| Sales by Company-owned restaurants | 2536 | 2310 | 10% | 36.2% |
| Other revenues | 162 | 120 | 35% | 2.3% |
| Total Revenues | 7009 | 6388 | 10% | 100.0% |
| Total operating costs and expenses | 3853 | 3519 | 9% | 55.0% |
| Operating Income | 3156 | 2868 | 10% | 45.0% |
| Interest expense | 410 | 380 | 8% | 5.9% |
| Provision for income taxes | 594 | 521 | 14% | 8.5% |
| Net Income | 2164 | 2017 | 7% | 30.9% |
| Earnings per share-diluted | 3.03 | 2.80 | 8% | – |
Segment Revenue Analysis (Full Year):
Total 2025 revenue reached $26,885 million (+4% yoy).
- U.S.: Comparable sales increased 2.1%.
- International Operated Markets (IOM): Comparable sales increased 3.2%.
- International Developmental Licensed Markets (IDL): Comparable sales increased 4.6%.
Balance Sheet
As of December 31 | In millions
| Item | 2025 | 2024 | yoy | % of Total Asset (2025) |
| Cash and equivalents | 774 | 1085 | -29% | 1.3% |
| Accounts and notes receivable | 2466 | 2383 | 3% | 4.1% |
| Other current assets | 924 | 1130 | -18% | 1.6% |
| Total Current Assets | 4163 | 4599 | -9% | 7.0% |
| Lease right-of-use asset, net | 14606 | 13339 | 10% | 24.5% |
| Net property and equipment | 28241 | 25295 | 12% | 47.5% |
| Total other assets | 12505 | 11950 | 5% | 21.0% |
| Total Assets | 59515 | 55182 | 8% | 100.0% |
| Total Current Liabilities | 4361 | 3861 | 13% | 7.3% |
| Long-term debt | 39973 | 38424 | 4% | 67.2% |
| Long-term lease liability | 14147 | 12888 | 10% | 23.8% |
| Other liabilities | 2826 | 3807 | -26% | 4.7% |
| Total Liabilities | 61306 | 58979 | 4% | 103.0% |
| Total Shareholders’ Equity (Deficit) | -1791 | -3797 | 53% | -3.0% |
Cash Flow Statement
In millions
| Item | FY 2025 | FY 2024 | yoy |
| Cash Provided by Operations | 10551 | 9447 | 12% |
| Capital Expenditures | -3365 | -2775 | 21% |
| Free Cash Flow (FCF) | 7186 | 6672 | 8% |
FCF Analysis:
Free Cash Flow grew by 8% in 2025, reaching $7.19 billion. This growth was underpinned by a strong 12% increase in operating cash flow, which successfully offset a 21% rise in capital expenditures. The increased CapEx reflects McDonald’s continued investment in new restaurant openings and digital modernization. The FCF conversion rate (FCF / Net Income) remains robust at approximately 83.9%, demonstrating the company’s high efficiency in converting accounting profits into actual cash.
McDonald’s Five-Year Financial Ratio Analysis
Based on the financial data from 2021 to 2025, here is the performance analysis for McDonald’s:
| Item | 2025 | 2024 | 2023 | 2022 | 2021 |
| Operating Margin | 46.10% | 45.19% | 45.69% | 40.42% | 44.59% |
| Net Margin | 31.85% | 31.72% | 33.22% | 26.64% | 32.49% |
| Return on Assets (ROA) | 14.39% | 14.90% | 15.08% | 12.25% | 14.01% |
| Debt-to-Asset Ratio | 90.94% | 94.21% | 94.67% | 96.74% | 91.64% |
| Current Ratio | 0.95 | 1.19 | 1.52 | 1.43 | 1.78 |
| FCF Conversion Rate | 83.92% | 81.14% | 85.67% | 88.85% | 94.10% |
Key Financial Insights
- Profitability Stability:The operating margin has consistently remained between 40% and 46%. This reflects the strength of the franchise-heavy business model, which delivers high-margin royalty income. The slight dip in 2022 was primarily due to one-time charges related to the exit from the Russian market. By 2025, the margin recovered to a peak of 46.10%.
- Capital Structure & Leverage:The debt-to-asset ratio remains high at over 90%, and shareholders’ equity is negative. This is a deliberate result of aggressive share buybacks and a capital structure optimized for tax efficiency and return on capital, rather than a sign of financial distress.
- Liquidity and Cash Flow:The current ratio dropped below 1.0 in 2025 (0.95), suggesting a tighter short-term liquidity position. However, this is mitigated by a very high Free Cash Flow (FCF) conversion rate, consistently above 80%, ensuring the company can easily cover its dividend payments and debt obligations through its strong cash generation.
P/E Ratio Analysis: McDonald’s vs. Competitors
As of mid-February 2026, the Price-to-Earnings (P/E) analysis for McDonald’s (MCD) relative to its key peers is as follows:
Competitor Valuation Comparison Table
Data based on recent market prices and Trailing Twelve Months (TTM) earnings:
| Ticker | Company Name | P/E (TTM) | Forward P/E (1Y) | Market Position |
| MCD | McDonald’s | 27.4x | 24.8x | Global leader with highest earnings stability. |
| YUM | Yum! Brands | 29.1x | 24.3x | Multi-brand (KFC, Taco Bell, Pizza Hut). |
| SBUX | Starbucks | 78.2x | 41.1x | High volatility; valuation reflects recovery bets. |
| QSR | Restaurant Brands | 29.3x | 25.1x | Parent of Burger King and Popeyes. |
| CMG | Chipotle | 33.7x | 31.5x | Fast-casual leader with premium growth. |
| DPZ | Domino’s Pizza | 22.7x | 21.0x | Pizza delivery leader; tech-driven efficiency. |
| WEN | Wendy’s | 8.3x | 8.5x | Value-play; slower growth profile. |
Valuation Insights
1. Defensive Premium
McDonald’s is currently trading at 27.4x, which is slightly above its 10-year historical median (approx. 25x-26x). The market is granting MCD a “quality premium” due to its resilient franchise model and the success of its 2025 value-leadership initiatives. Compared to the broader restaurant industry average (approx. 21.4x), MCD remains a premium-priced stock.
2. Relative Value vs. Peers
- Vs. Diversified Peers (YUM/QSR): MCD’s valuation is largely in line with Yum! Brands and Restaurant Brands International. This suggests that the market views global fast-food giants as “safe havens” in the current economic climate.
- Vs. Growth Peers (CMG): Chipotle’s higher P/E of 33.7x reflects its superior margin expansion and unit growth potential. MCD, by contrast, is valued for its massive scale and reliable dividend growth.
3. Forward Outlook
The Forward P/E of 24.8x indicates that analysts expect solid earnings growth for McDonald’s throughout 2026. This optimism is driven by the expansion of the “loyalty member” base (reaching 210 million users) and the “Accelerating the Arches” strategy, which focuses on digital sales.
4. Valuation Risk
With the P/E sitting near a two-year high, any slowdown in global comparable sales or a shift in consumer spending could lead to a valuation contraction. The current price reflects significant “perfection” in execution.
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