Intrinsic value of McDonald's - MCD

Previous Close

$161.73

  Intrinsic Value

$11.40

stock screener

  Rating & Target

str. sell

-93%

Previous close

$161.73

 
Intrinsic value

$11.40

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of MCD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 130.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  23,276
  23,812
  24,424
  25,111
  25,872
  26,707
  27,617
  28,601
  29,662
  30,801
  32,018
  33,318
  34,701
  36,172
  37,732
  39,386
  41,136
  42,987
  44,943
  47,008
  49,187
  51,485
  53,907
  56,459
  59,147
  61,977
  64,955
  68,090
  71,387
  74,856
Variable operating expenses, $m
  15,940
  16,301
  16,714
  17,177
  17,691
  18,254
  18,868
  19,532
  20,247
  21,015
  21,599
  22,475
  23,409
  24,401
  25,453
  26,569
  27,749
  28,998
  30,317
  31,710
  33,180
  34,730
  36,364
  38,086
  39,899
  41,808
  43,817
  45,931
  48,156
  50,496
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  15,940
  16,301
  16,714
  17,177
  17,691
  18,254
  18,868
  19,532
  20,247
  21,015
  21,599
  22,475
  23,409
  24,401
  25,453
  26,569
  27,749
  28,998
  30,317
  31,710
  33,180
  34,730
  36,364
  38,086
  39,899
  41,808
  43,817
  45,931
  48,156
  50,496
Operating income, $m
  7,337
  7,511
  7,710
  7,934
  8,182
  8,453
  8,749
  9,070
  9,415
  9,785
  10,420
  10,843
  11,293
  11,771
  12,279
  12,817
  13,387
  13,989
  14,626
  15,298
  16,007
  16,755
  17,543
  18,373
  19,248
  20,169
  21,138
  22,158
  23,232
  24,360
EBITDA, $m
  10,044
  10,275
  10,540
  10,836
  11,165
  11,525
  11,918
  12,342
  12,800
  13,291
  13,817
  14,378
  14,975
  15,609
  16,283
  16,996
  17,751
  18,550
  19,394
  20,285
  21,226
  22,217
  23,262
  24,364
  25,524
  26,745
  28,030
  29,383
  30,806
  32,303
Interest expense (income), $m
  874
  1,595
  1,269
  1,308
  1,352
  1,401
  1,456
  1,516
  1,582
  1,652
  1,729
  1,811
  1,898
  1,992
  2,092
  2,197
  2,310
  2,429
  2,555
  2,688
  2,829
  2,978
  3,135
  3,300
  3,474
  3,658
  3,852
  4,055
  4,270
  4,496
  4,733
Earnings before tax, $m
  5,742
  6,242
  6,403
  6,582
  6,780
  6,997
  7,233
  7,488
  7,763
  8,057
  8,609
  8,944
  9,301
  9,680
  10,082
  10,507
  10,958
  11,434
  11,938
  12,469
  13,029
  13,620
  14,243
  14,899
  15,590
  16,317
  17,083
  17,889
  18,736
  19,627
Tax expense, $m
  1,550
  1,685
  1,729
  1,777
  1,831
  1,889
  1,953
  2,022
  2,096
  2,175
  2,324
  2,415
  2,511
  2,614
  2,722
  2,837
  2,959
  3,087
  3,223
  3,367
  3,518
  3,677
  3,846
  4,023
  4,209
  4,406
  4,612
  4,830
  5,059
  5,299
Net income, $m
  4,192
  4,557
  4,674
  4,805
  4,950
  5,108
  5,280
  5,466
  5,667
  5,881
  6,285
  6,529
  6,790
  7,066
  7,360
  7,670
  7,999
  8,347
  8,714
  9,102
  9,511
  9,943
  10,397
  10,876
  11,381
  11,912
  12,471
  13,059
  13,677
  14,328

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  34,484
  35,277
  36,183
  37,201
  38,329
  39,566
  40,914
  42,373
  43,944
  45,630
  47,435
  49,360
  51,410
  53,588
  55,900
  58,349
  60,942
  63,685
  66,582
  69,641
  72,869
  76,274
  79,862
  83,643
  87,625
  91,817
  96,230
  100,874
  105,759
  110,898
Adjusted assets (=assets-cash), $m
  34,484
  35,277
  36,183
  37,201
  38,329
  39,566
  40,914
  42,373
  43,944
  45,630
  47,435
  49,360
  51,410
  53,588
  55,900
  58,349
  60,942
  63,685
  66,582
  69,641
  72,869
  76,274
  79,862
  83,643
  87,625
  91,817
  96,230
  100,874
  105,759
  110,898
Revenue / Adjusted assets
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
Average production assets, $m
  24,696
  25,264
  25,914
  26,643
  27,450
  28,336
  29,302
  30,346
  31,472
  32,679
  33,971
  35,350
  36,818
  38,378
  40,034
  41,788
  43,645
  45,609
  47,684
  49,875
  52,187
  54,625
  57,195
  59,903
  62,755
  65,757
  68,918
  72,243
  75,742
  79,422
Working capital, $m
  -885
  -905
  -928
  -954
  -983
  -1,015
  -1,049
  -1,087
  -1,127
  -1,170
  -1,217
  -1,266
  -1,319
  -1,375
  -1,434
  -1,497
  -1,563
  -1,634
  -1,708
  -1,786
  -1,869
  -1,956
  -2,048
  -2,145
  -2,248
  -2,355
  -2,468
  -2,587
  -2,713
  -2,845
Total debt, $m
  23,500
  24,214
  25,030
  25,946
  26,961
  28,074
  29,287
  30,600
  32,014
  33,532
  35,156
  36,889
  38,733
  40,694
  42,774
  44,979
  47,313
  49,781
  52,389
  55,142
  58,047
  61,111
  64,341
  67,743
  71,327
  75,100
  79,072
  83,251
  87,648
  92,273
Total liabilities, $m
  31,035
  31,749
  32,565
  33,481
  34,496
  35,610
  36,823
  38,135
  39,550
  41,067
  42,691
  44,424
  46,269
  48,229
  50,310
  52,514
  54,848
  57,316
  59,924
  62,677
  65,583
  68,646
  71,876
  75,279
  78,862
  82,636
  86,607
  90,787
  95,183
  99,808
Total equity, $m
  3,448
  3,528
  3,618
  3,720
  3,833
  3,957
  4,091
  4,237
  4,394
  4,563
  4,743
  4,936
  5,141
  5,359
  5,590
  5,835
  6,094
  6,368
  6,658
  6,964
  7,287
  7,627
  7,986
  8,364
  8,762
  9,182
  9,623
  10,087
  10,576
  11,090
Total liabilities and equity, $m
  34,483
  35,277
  36,183
  37,201
  38,329
  39,567
  40,914
  42,372
  43,944
  45,630
  47,434
  49,360
  51,410
  53,588
  55,900
  58,349
  60,942
  63,684
  66,582
  69,641
  72,870
  76,273
  79,862
  83,643
  87,624
  91,818
  96,230
  100,874
  105,759
  110,898
Debt-to-equity ratio
  6.810
  6.860
  6.920
  6.970
  7.030
  7.100
  7.160
  7.220
  7.290
  7.350
  7.410
  7.470
  7.530
  7.590
  7.650
  7.710
  7.760
  7.820
  7.870
  7.920
  7.970
  8.010
  8.060
  8.100
  8.140
  8.180
  8.220
  8.250
  8.290
  8.320
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,192
  4,557
  4,674
  4,805
  4,950
  5,108
  5,280
  5,466
  5,667
  5,881
  6,285
  6,529
  6,790
  7,066
  7,360
  7,670
  7,999
  8,347
  8,714
  9,102
  9,511
  9,943
  10,397
  10,876
  11,381
  11,912
  12,471
  13,059
  13,677
  14,328
Depreciation, amort., depletion, $m
  2,708
  2,764
  2,829
  2,902
  2,983
  3,072
  3,168
  3,273
  3,385
  3,506
  3,397
  3,535
  3,682
  3,838
  4,003
  4,179
  4,365
  4,561
  4,768
  4,988
  5,219
  5,463
  5,720
  5,990
  6,275
  6,576
  6,892
  7,224
  7,574
  7,942
Funds from operations, $m
  6,899
  7,321
  7,503
  7,707
  7,933
  8,180
  8,448
  8,739
  9,052
  9,387
  9,682
  10,064
  10,471
  10,904
  11,363
  11,849
  12,364
  12,908
  13,483
  14,090
  14,730
  15,405
  16,117
  16,867
  17,656
  18,487
  19,362
  20,283
  21,252
  22,270
Change in working capital, $m
  -17
  -20
  -23
  -26
  -29
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -53
  -56
  -59
  -63
  -67
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -108
  -113
  -119
  -125
  -132
Cash from operations, $m
  6,917
  7,341
  7,527
  7,733
  7,962
  8,212
  8,483
  8,776
  9,092
  9,431
  9,728
  10,114
  10,524
  10,960
  11,422
  11,912
  12,430
  12,978
  13,557
  14,168
  14,813
  15,493
  16,209
  16,964
  17,758
  18,595
  19,476
  20,402
  21,377
  22,402
Maintenance CAPEX, $m
  -2,421
  -2,470
  -2,526
  -2,591
  -2,664
  -2,745
  -2,834
  -2,930
  -3,035
  -3,147
  -3,268
  -3,397
  -3,535
  -3,682
  -3,838
  -4,003
  -4,179
  -4,365
  -4,561
  -4,768
  -4,988
  -5,219
  -5,463
  -5,720
  -5,990
  -6,275
  -6,576
  -6,892
  -7,224
  -7,574
New CAPEX, $m
  -485
  -568
  -649
  -729
  -808
  -886
  -965
  -1,045
  -1,125
  -1,208
  -1,292
  -1,379
  -1,468
  -1,560
  -1,656
  -1,754
  -1,857
  -1,964
  -2,075
  -2,191
  -2,312
  -2,438
  -2,570
  -2,708
  -2,852
  -3,003
  -3,160
  -3,326
  -3,499
  -3,680
Cash from investing activities, $m
  -2,906
  -3,038
  -3,175
  -3,320
  -3,472
  -3,631
  -3,799
  -3,975
  -4,160
  -4,355
  -4,560
  -4,776
  -5,003
  -5,242
  -5,494
  -5,757
  -6,036
  -6,329
  -6,636
  -6,959
  -7,300
  -7,657
  -8,033
  -8,428
  -8,842
  -9,278
  -9,736
  -10,218
  -10,723
  -11,254
Free cash flow, $m
  4,010
  4,304
  4,351
  4,413
  4,490
  4,580
  4,684
  4,802
  4,932
  5,076
  5,168
  5,338
  5,521
  5,718
  5,929
  6,154
  6,394
  6,650
  6,921
  7,209
  7,513
  7,836
  8,176
  8,536
  8,916
  9,317
  9,739
  10,185
  10,654
  11,148
Issuance/(repayment) of debt, $m
  -6,037
  714
  816
  916
  1,015
  1,114
  1,213
  1,313
  1,414
  1,518
  1,624
  1,733
  1,845
  1,961
  2,080
  2,205
  2,334
  2,468
  2,608
  2,753
  2,905
  3,064
  3,230
  3,403
  3,584
  3,773
  3,972
  4,179
  4,397
  4,625
Issuance/(repurchase) of shares, $m
  2,525
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -3,512
  714
  816
  916
  1,015
  1,114
  1,213
  1,313
  1,414
  1,518
  1,624
  1,733
  1,845
  1,961
  2,080
  2,205
  2,334
  2,468
  2,608
  2,753
  2,905
  3,064
  3,230
  3,403
  3,584
  3,773
  3,972
  4,179
  4,397
  4,625
Total cash flow (excl. dividends), $m
  499
  5,018
  5,167
  5,329
  5,505
  5,694
  5,897
  6,114
  6,346
  6,593
  6,792
  7,070
  7,366
  7,679
  8,009
  8,359
  8,728
  9,118
  9,529
  9,962
  10,419
  10,900
  11,406
  11,939
  12,500
  13,090
  13,711
  14,364
  15,051
  15,772
Retained Cash Flow (-), $m
  -6,716
  -79
  -91
  -102
  -113
  -124
  -135
  -146
  -157
  -169
  -180
  -193
  -205
  -218
  -231
  -245
  -259
  -274
  -290
  -306
  -323
  -340
  -359
  -378
  -398
  -419
  -441
  -464
  -489
  -514
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  114
  116
  119
  122
  126
  129
  134
  138
  143
  148
  154
  160
  167
  174
  181
  189
  197
  206
  215
  225
  235
  246
  257
  270
  282
  296
  310
  325
  340
  357
Cash available for distribution, $m
  -6,218
  4,938
  5,076
  5,227
  5,392
  5,570
  5,762
  5,969
  6,189
  6,425
  6,611
  6,878
  7,161
  7,461
  7,778
  8,114
  8,469
  8,844
  9,239
  9,656
  10,096
  10,559
  11,047
  11,561
  12,102
  12,671
  13,270
  13,900
  14,562
  15,259
Discount rate, %
  12.90
  13.55
  14.22
  14.93
  15.68
  16.46
  17.29
  18.15
  19.06
  20.01
  21.01
  22.06
  23.17
  24.32
  25.54
  26.82
  28.16
  29.57
  31.05
  32.60
  34.23
  35.94
  37.74
  39.62
  41.60
  43.68
  45.87
  48.16
  50.57
  53.10
PV of cash for distribution, $m
  -5,507
  3,830
  3,406
  2,996
  2,603
  2,232
  1,887
  1,572
  1,288
  1,037
  811
  629
  477
  354
  257
  181
  125
  84
  54
  34
  21
  12
  7
  4
  2
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

McDonald's Corporation (McDonald's) operates and franchises McDonald's restaurants. The Company's restaurants serve a locally relevant menu of food and drinks sold at various price points in over 100 countries. The Company's segments include U.S., International Lead Markets, High Growth Markets, and Foundational Markets and Corporate. The U.S. segment focuses on offering a platform for authentic ingredients that allows customers to customize their sandwiches. Its High Growth Markets segment includes its operations in markets, such as China, Italy, Korea, Poland, Russia, Spain, Switzerland, the Netherlands and related markets. The International Lead markets segment includes the Company's operations in various markets, such as Australia, Canada, France, Germany, the United Kingdom and related markets. The Foundational markets and Corporate segment is engaged in operating restaurants and increasing convenience to customers, including through drive-thru and delivery.

FINANCIAL RATIOS  of  McDonald's (MCD)

Valuation Ratios
P/E Ratio 28.3
Price to Sales 5.4
Price to Book -60.1
Price to Tangible Book
Price to Cash Flow 21.9
Price to Free Cash Flow 31.3
Growth Rates
Sales Growth Rate -3.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.4%
Cap. Spend. - 3 Yr. Gr. Rate -8.4%
Financial Strength
Quick Ratio 18
Current Ratio 0.4
LT Debt to Equity -1174.2%
Total Debt to Equity -1177.7%
Interest Coverage 9
Management Effectiveness
Return On Assets 15.3%
Ret/ On Assets - 3 Yr. Avg. 14.5%
Return On Total Capital 17.1%
Ret/ On T. Cap. - 3 Yr. Avg. 16.3%
Return On Equity 191.9%
Return On Equity - 3 Yr. Avg. 90.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 41.4%
Gross Margin - 3 Yr. Avg. 39.4%
EBITDA Margin 37.6%
EBITDA Margin - 3 Yr. Avg. 35.7%
Operating Margin 31.5%
Oper. Margin - 3 Yr. Avg. 29.5%
Pre-Tax Margin 27.9%
Pre-Tax Margin - 3 Yr. Avg. 26.8%
Net Profit Margin 19%
Net Profit Margin - 3 Yr. Avg. 18.1%
Effective Tax Rate 31.7%
Eff/ Tax Rate - 3 Yr. Avg. 32.7%
Payout Ratio 65.2%

MCD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MCD stock intrinsic value calculation we used $22820 million for the last fiscal year's total revenue generated by McDonald's. The default revenue input number comes from 2017 income statement of McDonald's. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MCD stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.9%, whose default value for MCD is calculated based on our internal credit rating of McDonald's, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of McDonald's.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MCD stock the variable cost ratio is equal to 68.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MCD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for McDonald's.

Corporate tax rate of 27% is the nominal tax rate for McDonald's. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MCD stock is equal to 0.5%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MCD are equal to 106.1%.

Life of production assets of 10 years is the average useful life of capital assets used in McDonald's operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MCD is equal to -3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-3268 million for McDonald's - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 807 million for McDonald's is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of McDonald's at the current share price and the inputted number of shares is $130.5 billion.

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COMPANY NEWS

▶ McDonald's to invest $78 million in Kansas restaurants before end of 2019   [Aug-16-18 03:41PM  American City Business Journals]
▶ Luxury Dining At McDonald's   [Aug-15-18 03:37PM  Bloomberg]
▶ McDonald's investing $43 million to modernize NM restaurants   [04:10PM  American City Business Journals]
▶ McDonald's to spend $124 million to modernize Kentucky stores   [01:51PM  American City Business Journals]
▶ 3 Top Stocks Under $20   [Aug-13-18 02:14PM  Motley Fool]
▶ Safe Investments to Regularly Earn 12%-Plus   [12:26PM  InvestorPlace]
▶ McDonald's Gold Card   [Aug-12-18 11:45AM  Bloomberg]
▶ Yes, McDonalds Is Giving Away Free Fast Food for Life   [Aug-10-18 06:53PM  GoBankingRates]
▶ McDonald's opens solar-powered flagship eatery   [Aug-09-18 03:07PM  American City Business Journals]
▶ Are the Shares of WING Stock Overdone?   [Aug-08-18 11:42PM  InvestorPlace]
▶ 3 Top Large-Cap Stocks to Buy in August   [12:24PM  Motley Fool]
▶ A Stealth Play on McDonald's: Market Recon   [07:23AM  TheStreet.com]
▶ McDonald's Talks About Its U.S. Growth Struggles   [Aug-05-18 09:31AM  Motley Fool]
▶ McDonald's We Are Unlimited agency growing its creative ranks   [01:12PM  American City Business Journals]
▶ Big Mac creator honored on 50th anniversary   [07:37AM  American City Business Journals]
▶ Apple Hits $1 Trillion Next Stop $300?   [11:57AM  InvestorPlace]
▶ Utah man sues McDonald's alleging his drink was drugged   [Aug-01-18 05:43PM  Associated Press]
▶ McDonald's Protects Its Rebound Streak   [01:24PM  Motley Fool]
▶ [$$] Further reading   [02:00AM  Financial Times]
▶ Why McDonald's Just Rolled Out Its Own Currency   [Jul-30-18 08:57PM  GoBankingRates]
▶ From golden arches to brass coins, McDonald's unveils 'currency'   [01:33PM  American City Business Journals]
▶ Trade of the Day: McDonalds Corp (MCD)   [08:41AM  InvestorPlace]
▶ 3 Terrible Reasons to Buy McDonald's   [03:00PM  Motley Fool]
▶ Final Trade: TWTR, CBS & more   [Jul-27-18 06:15PM  CNBC Videos]
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