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MCD, McDonald's Corporation

Restaurants consumer brand

McDonald's sells fast food — burgers, fries, chicken, drinks and breakfast — to ordinary people walking up to a counter or pulling through a drive-thru, in the United States and around the world. Most of its restaurants are run not by the company but by franchisees and licensees, who pay it royalties on their sales and, in many cases, rent on the land and buildings the company owns or leases to them. So it earns money two ways: from the meals it sells at the stores it operates itself, and, as the larger engine, as a brand-and-property landlord collecting a cut off restaurants that other people staff and manage.

Latest annual: FY2025 10-K

MCD · McDonald's Corporation

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$26.9B

+3.7% YoY · 7% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $27.4B 5-yr avg $24.9B

Operating margin 46.3% 5-yr avg 44.4%

ROIC 26% 5-yr avg 29%

Owner-earnings margin 37% 5-yr avg 35%

Free cash flow margin 26% 5-yr avg 27%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is International Operated Markets (51%), U.S. (40%) and International Developmental Licensed Markets and Corporate (9%).
What moves the needle: The test is whether the brand and the franchise system together form a franchise in the investor's sense, or whether a hamburger is finally a commodity anyone can sell on the next corner. Watch the pricing power — does the name let the menu hold its price against the grocery aisle and rival chains — and watch the franchisee's own unit economics, because a royalty-and-rent stream is only as durable as the operators paying it; the real estate the company controls is both a cost-position lever and a source of discipline over the network. The reinvestment question is whether new units and reimagined old ones can absorb capital at a worthwhile return, since a saturated map and shifting tastes are the standing threats, and the company carries debt rather than cash. The margin, return-on-capital and balance-sheet figures that show how this is faring are in the record below.
Is it a good business?: Return on capital has run high across the record (median 27%, above 15% in 10 of 10 years). Owner earnings agree: roughly 33% of revenue reaches owners as cash, consistently. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.

Where the money comes from

read the 10-K →

The biggest segment, International Operated Markets, is also where the profit is made: 51% of revenue and 51% of segment operating profit.

Revenue by reportable segment, FY2025

Operating profit same segments

International Operated Markets51%$13.6B51% of profit
U.S.40%$10.8B47% of profit
International Developmental Licensed Markets and Corporate9%$2.4B2% of profit

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$24.6B	$22.8B	$21.3B	$21.4B	$19.2B	$23.2B	$23.2B	$25.5B	$25.9B	$26.9B	$27.4B	RevenueRevenue
10%	10%	10%	10%	—	—	12%	11%	11%	11%	11%	SG&A / revenueSG&A/rev
$7.7B	$9.6B	$8.8B	$9.1B	$7.3B	$10.4B	$9.4B	$11.6B	$11.7B	$12.4B	$12.7B	Operating incomeOp. inc.
31.5%	41.9%	41.5%	42.5%	38.1%	44.6%	40.4%	45.7%	45.2%	46.1%	46.3%	Operating marginOp. mgn
$4.7B	$5.2B	$5.9B	$6.0B	$4.7B	$7.5B	$6.2B	$8.5B	$8.2B	$8.6B	$8.7B	Net incomeNet inc.
32%	39%	24%	25%	23%	17%	21%	20%	21%	21%	22%	Effective tax rateTax rate
											Cash flow & returns
$6.1B	$5.6B	$7.0B	$8.1B	$6.3B	$9.1B	$7.4B	$9.6B	$9.4B	$10.6B	$10.5B	Operating cash flowOp. cash
$1.5B	$1.4B	$215M	$263M	$301M	$330M	$370M	$382M	$447M	$457M	$461M	DepreciationDeprec.
($275M)	($1.1B)	$703M	$1.7B	$1.1B	$1.1B	$673M	$586M	$605M	$1.4B	$1.2B	Working capital & otherWC & other
$1.8B	$1.9B	$2.7B	$2.4B	$1.6B	$2.0B	$1.9B	$2.4B	$2.8B	$3.4B	$3.5B	CapexCapex
7.4%	8.1%	12.9%	11.2%	8.5%	8.8%	8.2%	9.2%	10.7%	12.5%	12.7%	Capex / revenueCapex/rev
$4.2B	$4.2B	$6.8B	$7.9B	$6.0B	$8.8B	$7.0B	$9.2B	$9.0B	$10.1B	$10.1B	Owner earningsOwner earn.
17.2%	18.4%	31.8%	36.8%	31.1%	37.9%	30.3%	36.2%	34.7%	37.5%	36.7%	Owner earnings marginOE mgn
$4.2B	$3.7B	$4.2B	$5.7B	$4.6B	$7.1B	$5.5B	$7.3B	$6.7B	$7.2B	$7.0B	Free cash flowFCF
17.2%	16.2%	19.9%	26.8%	24.1%	30.6%	23.7%	28.5%	25.7%	26.7%	25.6%	Free cash flow marginFCF mgn
$3.1B	$3.1B	$3.3B	$3.6B	$3.8B	$3.9B	$4.2B	$4.5B	$4.9B	$5.1B	$5.2B	Dividends paidDiv. paid
$11.2B	$4.7B	$5.2B	$5.0B	$908M	$846M	$3.9B	$3.1B	$2.8B	$2.1B	—	BuybacksBuybacks
23%	24%	28%	27%	22%	33%	27%	31%	28%	26%	26%	ROICROIC
											Balance sheet
$1.2B	$2.5B	$866M	$899M	$3.4B	$4.7B	$2.6B	$4.6B	$1.1B	$774M	$1.6B	Cash & investmentsCash+inv
$59M	$59M	$51M	$50M	$51M	$56M	$52M	$53M	$56M	$61M	$61M	InventoryInvent.
$756M	$925M	$1.2B	$988M	$741M	$1.0B	$980M	$1.1B	$1.0B	$1.1B	$1.1B	Accounts payablePayables
($697M)	($866M)	($1.2B)	($938M)	($690M)	($951M)	($928M)	($1.1B)	($973M)	($1.1B)	($1.0B)	Operating working capitalOper. WC
$4.8B	$5.3B	$4.1B	$3.6B	$6.2B	$7.1B	$5.4B	$8.0B	$4.6B	$4.2B	$4.7B	Current assetsCur. assets
$3.5B	$2.9B	$3.0B	$3.6B	$6.2B	$4.0B	$3.8B	$6.9B	$3.9B	$4.4B	$4.1B	Current liabilitiesCur. liab.
1.4×	1.8×	1.4×	1.0×	1.0×	1.8×	1.4×	1.2×	1.2×	1.0×	1.1×	Current ratioCurr. ratio
$2.3B	$2.4B	$2.3B	$2.7B	$2.8B	$2.8B	$2.9B	$3.0B	$3.1B	$3.4B	$3.3B	GoodwillGoodwill
$31.0B	$33.8B	$32.8B	$47.5B	$52.6B	$53.9B	$50.4B	$56.1B	$55.2B	$59.5B	$60.0B	Total assetsAssets
$26.0B	$29.5B	$31.1B	$34.2B	$37.4B	$35.6B	$35.9B	$39.3B	$38.4B	$40.7B	$40.8B	Total debtDebt
$24.7B	$27.1B	$30.2B	$33.3B	$34.0B	$30.9B	$33.3B	$34.8B	$37.3B	$39.9B	$39.3B	Net debt / (cash)Net debt
8.8×	10.4×	9.0×	8.1×	6.0×	8.7×	7.8×	8.6×	7.8×	7.8×	7.9×	Interest coverageInt. cov.
($2.2B)	($3.3B)	($6.3B)	($8.2B)	($7.8B)	($4.6B)	($6.0B)	($4.7B)	($3.8B)	($1.8B)	($1.3B)	Shareholders’ equityEquity
0.5%	0.5%	0.6%	0.5%	0.5%	0.6%	0.7%	0.7%	0.7%	0.6%	0.7%	Stock comp / revenueSBC/rev
$40M	—	$1M	$99M	—	—	—	—	—	—	—	Goodwill written downGW imp.
											Per share
861M	816M	786M	765M	750M	752M	741M	732M	722M	716M	714M	Shares out (diluted)Shares
$28.59	$27.98	$27.06	$27.93	$25.61	$30.89	$31.27	$34.81	$35.91	$37.53	$38.47	Revenue / shareRev/sh
$5.44	$6.37	$7.54	$7.88	$6.31	$10.04	$8.33	$11.56	$11.39	$11.95	$12.16	EPS (diluted)EPS
$4.92	$5.14	$8.59	$10.28	$7.95	$11.72	$9.47	$12.60	$12.47	$14.09	$14.12	Owner earnings / shareOE/sh
$4.92	$4.53	$5.38	$7.49	$6.17	$9.45	$7.40	$9.91	$9.24	$10.03	$9.87	Free cash flow / shareFCF/sh
$3.55	$3.79	$4.14	$4.68	$5.00	$5.21	$5.62	$6.19	$6.75	$7.14	$7.25	Dividends / shareDiv/sh
$2.11	$2.27	$3.49	$3.13	$2.19	$2.71	$2.56	$3.22	$3.84	$4.70	$4.90	Cap. spending / shareCapex/sh
$-2.56	$-4.01	$-7.97	$-10.73	$-10.43	$-6.12	$-8.10	$-6.43	$-5.26	$-2.50	$-1.80	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+3.1%/yr	+7.9%/yr
Owner earnings / share	+12.4%/yr	+12.1%/yr
EPS	+9.1%/yr	+13.6%/yr
Dividends / share	+8.1%/yr	+7.4%/yr
Capital spending / share	+9.3%/yr	+16.5%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

716Mpeak FY2016

ROIC

26%low FY2020

Net debt ÷ owner earnings

4.0×peak FY2017

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$10.1Bowner earningsvs.$8.6Bnet incomelow FY2017

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $10.1B of owner earnings, the operating cash left after the $457M it takes just to hold its position. It put $2.9B more into growth; free cash flow, after that spending, was $7.2B.

Reported net income$8.6B

Owner earnings$10.1B · 38% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$8.6B	$8.2B	$8.5B	$6.2B	$7.5B
Depreciation & amortizationnon-cash charge added back	+$457M	+$447M	+$382M	+$370M	+$330M
Stock-based compensationreal costnon-cash, but a real cost	+$165M	+$172M	+$175M	+$167M	+$139M
Working capital & othertiming of cash in and out, other non-cash items	+$1.4B	+$605M	+$586M	+$673M	+$1.1B
Cash from operations	$10.6B	$9.4B	$9.6B	$7.4B	$9.1B
Maintenance capital expenditurethe spending needed just to hold position and volume	−$457M	−$447M	−$382M	−$370M	−$330M
Owner earnings	$10.1B	$9.0B	$9.2B	$7.0B	$8.8B
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$2.9B	−$2.3B	−$2.0B	−$1.5B	−$1.7B
Free cash flow	$7.2B	$6.7B	$7.3B	$5.5B	$7.1B
Owner-earnings marginowner earnings ÷ revenue	38%	35%	36%	30%	38%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $457M, roughly its depreciation, the rate its assets wear out). The other $2.9B of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $165M), owner earnings is nearer $9.9B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 7.8×

Comfortable

Operating income $12.4B ÷ interest expense $1.6B

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $39.9B · 3.2× operating profit

Meaningful net debt

Cash $774M − debt $40.7B

What this means
Netting $774M of cash and short-term investments against $40.7B of debt leaves $39.9B owed, about 3.2× a year's operating profit (3.3× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Is it a good business?

Return on invested capital 27%

Very high (≥25%) through the cycle

10-yr median, range 22%–33%; 26% latest = NOPAT $9.7B ÷ invested capital $38.1B

Industry peers: median 27%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 26% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 32%

High through the cycle

10-yr median margin, range 17%–38%; latest $10.1B = operating cash $10.6B − maintenance capex $457M

Industry peers: median 11%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 38% of revenue this year, a 32% median across 10 years. It chose to put $2.9B more into growth, so free cash flow this year was $7.2B — the gap is investment, not weakness. Treating stock comp as the real expense it is (less $165M of SBC) leaves $9.9B.
Are earnings backed by cash? 1.23×

Cash-backed

Cash from ops $10.6B ÷ net income $8.6B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 71%

Returns about half

Dividends + buybacks $7.2B ÷ Owner Earnings $10.1B

What this means
Of $10.1B Owner Earnings, $7.2B (71%) went back to shareholders, $5.1B dividends, $2.1B buybacks. Net of $165M stock comp, the real buyback was about $1.9B. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 7.36×

Expanding

Capex $3.4B ÷ depreciation $457M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 4 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $26.9B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 0.95×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $40.7B vs ($198M) WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +60%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $11.85/share (latest year $12.05), the averaged base the calculator's gate runs on, and book value is $-2.52/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 10 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 38% → 46% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about 38% early to 46% lately, median 42% — pricing power intact or improving.
Reinvestment, incremental ROIC 34%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth +10%/yr

What this means
Owner earnings grew about 10% a year over the record.
Worst year 2016 · 31.5% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −2.0%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing Raised, but not as a competitor

The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product.

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$4.7B

Cash & short-term investments$1.6B
Inventory$61M
Other current assets$3.1B

Current liabilities$4.1B

Debt due within a year$725M
Accounts payable$1.1B
Other current liabilities$2.3B

Current ratio1.14×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.12×stricter: inventory excluded

Cash ratio0.38×strictest: cash alone against what's due

Working capital$563Mthe cushion left after near-term bills

Debt due this year vs. cash$725M due · $1.6B cash covered by cash on hand, no refinancing forced · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+9.4%the freshest read on whether the business is still growing

Current ratio, recent quarters1.1× → 1.1×

Deeper floors

Tangible book value($4.6B)equity stripped of goodwill & intangibles

Debt incl. operating leases$55.6B$14.8B of it operating leases; with finance leases, “total fixed claims” below reaches $55.2B (annual-report basis)

Deferred revenue$946Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$0

'27$3.2B

'28$5.2B

'29$3.6B

'30$3.0B

later$25.1B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$0the first rung: what must be repaid or rolled over within the year

Within two years$3.2Bthe near wall, the part most exposed to today’s credit conditions

Biggest single year$5.2Bin 2028the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$40.1Bevery year plus what lies beyond, as the footnote totals it

Maturity schedule extracted from the company’s Dec 31, 2025 annual report and reconciled to the balance-sheet debt.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$1.3B

'27$1.3B

'28$1.2B

'29$1.2B

'30$1.2B

later$14.4B

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$1.3Ba fixed cash payment, owed whether or not the business has a good year

Total lease payments$20.6Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$14.5Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$40.7B

Lease obligations (present value)$14.5B

Total fixed claims on the business$55.2B

Counting the leases the way Buffett does, the fixed claims on this business come to $55.2B, of which the leases are 26%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Dec 31, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2016–2025

Over the record, the business generated $79.1B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$22.9B · 29%
Dividends$39.3B · 50%
Buybacks$39.6B · 50%

Returned to owners$79.0B
108% of the owner earnings the business produced over the span, $39.3B as dividends and $39.6B as buybacks.
Source of funding−$22.8B
Reinvestment and shareholder returns ran $22.8B beyond the operating cash the business generated, so the gap was financed off the balance sheet: debt rose from $26.0B to $40.8B.
Average price paid for buybacks—
Buybacks ran $39.6B over the span, but the filings don't tag the share count needed to deduce the average price paid.
Net change in share count−17.2%
The diluted count fell from 861M to 714M, so the buybacks outran the stock issued to staff.
Dividend record$7.14/sh
Paid in 10 of the years on record, the per-share dividend growing about 8% a year. It was never cut over the span.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill$3.4B6% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity—goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$0over 10 years buying other businesses, against $22.9B of capital spent building

$140M written down across 3 years (2016, 2018, 2019): goodwill the company has already conceded it overpaid for, charged against earnings. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Mr. Kempczinski	$20.0M	$40.2M	$8.8B
2022	Mr. Kempczinski	$17.8M	$29.6M	$7.0B
2023	Mr. Kempczinski	$19.2M	$36.9M	$9.2B
2024	Mr. Kempczinski	$18.2M	$12.7M	$9.0B
2025	Mr. Kempczinski	$20.6M	$17.9M	$10.1B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Stock-based compensation$165M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 1% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why McDonald's Corporation is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

None of the 6 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Restaurants

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
SBUXStarbucks Corporation	$37.2B	68%	15.5%	96%	13%
MCDMcDonald's Corporation	$26.9B	—	42.2%	27%	33%
ARMKAramark	$18.5B	11%	4.2%	7%	2%
DRIDarden Restaurants Inc.	$12.1B	59%	9.6%	27%	9%
CMGChipotle Mexican Grill Inc.	$11.9B	—	9.3%	36%	11%
YUMCYum China Holdings Inc.	$11.8B	51%	10.3%	18%	8%
QSRRestaurant Brands International Inc.	$9.4B	66%	31.0%	11%	21%
YUMYum! Brands Inc.	$8.2B	73%	32.2%	75%	20%
Group median	—	—	12.9%	27%	12%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what McDonald's Corporation has delivered.

Today’s price $

Through the cycle, McDonald's Corporation earns about $8.9B on its 33.2% median owner-earnings margin. This year’s 37.5% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($8.9B) Net of stock comp (−$180M) Steady-state · maintenance capex ($10.1B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+5%/yr

Owner-earnings growth · ’16→’25+6%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $7.0B on 711M shares outstanding, per the 10-Q cover, as of 2026-03-31; net debt $39.3B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($3.5B) runs well above depreciation ($461M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $10.1B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh MCD against another business →

The owners of MCD: the meeting and the votes →

Cite: Owner Scorecard, "McDonald's Corporation (MCD), the owner's record," https://ownerscorecard.com/c/MCD, data as of 2026-07-09.

Manual order: ← MCBS its page in the Manual MCFT →

Industry order: ← MB the Restaurants chapter NATH →