Intrinsic value of McDonald's - MCD

Previous Close

$184.01

  Intrinsic Value

$11.78

stock screener

  Rating & Target

str. sell

-94%

Previous close

$184.01

 
Intrinsic value

$11.78

 
Up/down potential

-94%

 
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 0001), $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 142.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

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
  23,277
  23,812
  24,424
  25,111
  25,872
  26,708
  27,617
  28,602
  29,663
  30,801
  32,019
  33,318
  34,702
  36,173
  37,733
  39,387
  41,137
  42,988
  44,944
  47,009
  49,188
  51,486
  53,908
  56,460
  59,148
  61,978
  64,957
  68,091
  71,389
  74,857
Variable operating expenses, $m
  15,940
  16,301
  16,714
  17,177
  17,691
  18,254
  18,868
  19,532
  20,248
  21,016
  21,599
  22,476
  23,409
  24,401
  25,454
  26,569
  27,750
  28,998
  30,318
  31,711
  33,181
  34,731
  36,365
  38,086
  39,899
  41,809
  43,818
  45,932
  48,157
  50,497
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
  20,248
  21,016
  21,599
  22,476
  23,409
  24,401
  25,454
  26,569
  27,750
  28,998
  30,318
  31,711
  33,181
  34,731
  36,365
  38,086
  39,899
  41,809
  43,818
  45,932
  48,157
  50,497
Operating income, $m
  7,337
  7,511
  7,710
  7,934
  8,182
  8,453
  8,749
  9,070
  9,415
  9,786
  10,420
  10,843
  11,293
  11,772
  12,279
  12,817
  13,387
  13,989
  14,626
  15,298
  16,007
  16,755
  17,543
  18,374
  19,248
  20,169
  21,139
  22,159
  23,232
  24,361
EBITDA, $m
  8,894
  9,099
  9,333
  9,595
  9,886
  10,205
  10,553
  10,929
  11,335
  11,770
  12,235
  12,731
  13,260
  13,822
  14,418
  15,050
  15,719
  16,426
  17,174
  17,963
  18,795
  19,673
  20,599
  21,574
  22,601
  23,683
  24,821
  26,019
  27,279
  28,604
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
  2,198
  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
  6,781
  6,998
  7,233
  7,488
  7,763
  8,057
  8,609
  8,944
  9,301
  9,680
  10,082
  10,508
  10,958
  11,435
  11,938
  12,469
  13,029
  13,620
  14,243
  14,899
  15,590
  16,318
  17,083
  17,889
  18,736
  19,628
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
  5,467
  5,667
  5,881
  6,285
  6,529
  6,790
  7,066
  7,360
  7,671
  7,999
  8,347
  8,715
  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
  36,184
  37,202
  38,330
  39,567
  40,915
  42,373
  43,945
  45,631
  47,435
  49,361
  51,410
  53,589
  55,901
  58,350
  60,944
  63,686
  66,583
  69,643
  72,871
  76,275
  79,864
  83,644
  87,626
  91,819
  96,232
  100,876
  105,761
  110,900
Adjusted assets (=assets-cash), $m
  34,484
  35,277
  36,184
  37,202
  38,330
  39,567
  40,915
  42,373
  43,945
  45,631
  47,435
  49,361
  51,410
  53,589
  55,901
  58,350
  60,944
  63,686
  66,583
  69,643
  72,871
  76,275
  79,864
  83,644
  87,626
  91,819
  96,232
  100,876
  105,761
  110,900
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
  23,486
  24,026
  24,644
  25,337
  26,105
  26,948
  27,866
  28,859
  29,930
  31,078
  32,307
  33,618
  35,014
  36,498
  38,073
  39,741
  41,507
  43,375
  45,348
  47,432
  49,630
  51,949
  54,393
  56,968
  59,680
  62,536
  65,541
  68,704
  72,031
  75,531
Working capital, $m
  -23
  -24
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -75
Total debt, $m
  23,500
  24,214
  25,030
  25,946
  26,961
  28,075
  29,288
  30,601
  32,015
  33,533
  35,157
  36,889
  38,734
  40,695
  42,775
  44,980
  47,314
  49,782
  52,390
  55,143
  58,048
  61,112
  64,342
  67,745
  71,328
  75,102
  79,073
  83,253
  87,650
  92,274
Total liabilities, $m
  31,036
  31,750
  32,566
  33,482
  34,497
  35,610
  36,823
  38,136
  39,550
  41,068
  42,692
  44,425
  46,269
  48,230
  50,311
  52,515
  54,849
  57,317
  59,925
  62,678
  65,584
  68,648
  71,877
  75,280
  78,864
  82,637
  86,609
  90,788
  95,185
  99,810
Total equity, $m
  3,448
  3,528
  3,618
  3,720
  3,833
  3,957
  4,091
  4,237
  4,394
  4,563
  4,744
  4,936
  5,141
  5,359
  5,590
  5,835
  6,094
  6,369
  6,658
  6,964
  7,287
  7,628
  7,986
  8,364
  8,763
  9,182
  9,623
  10,088
  10,576
  11,090
Total liabilities and equity, $m
  34,484
  35,278
  36,184
  37,202
  38,330
  39,567
  40,914
  42,373
  43,944
  45,631
  47,436
  49,361
  51,410
  53,589
  55,901
  58,350
  60,943
  63,686
  66,583
  69,642
  72,871
  76,276
  79,863
  83,644
  87,627
  91,819
  96,232
  100,876
  105,761
  110,900
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
  5,467
  5,667
  5,881
  6,285
  6,529
  6,790
  7,066
  7,360
  7,671
  7,999
  8,347
  8,715
  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
  1,557
  1,588
  1,622
  1,661
  1,705
  1,752
  1,803
  1,859
  1,919
  1,984
  1,815
  1,889
  1,967
  2,050
  2,139
  2,233
  2,332
  2,437
  2,548
  2,665
  2,788
  2,918
  3,056
  3,200
  3,353
  3,513
  3,682
  3,860
  4,047
  4,243
Funds from operations, $m
  5,749
  6,145
  6,296
  6,466
  6,654
  6,860
  7,084
  7,326
  7,586
  7,865
  8,100
  8,418
  8,757
  9,117
  9,499
  9,903
  10,331
  10,784
  11,262
  11,767
  12,300
  12,861
  13,453
  14,077
  14,734
  15,425
  16,153
  16,919
  17,724
  18,571
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  5,750
  6,145
  6,297
  6,467
  6,655
  6,861
  7,085
  7,327
  7,587
  7,867
  8,101
  8,419
  8,758
  9,118
  9,500
  9,905
  10,333
  10,786
  11,264
  11,769
  12,302
  12,864
  13,456
  14,079
  14,736
  15,428
  16,156
  16,922
  17,727
  18,575
Maintenance CAPEX, $m
  -1,294
  -1,319
  -1,350
  -1,384
  -1,423
  -1,467
  -1,514
  -1,566
  -1,621
  -1,681
  -1,746
  -1,815
  -1,889
  -1,967
  -2,050
  -2,139
  -2,233
  -2,332
  -2,437
  -2,548
  -2,665
  -2,788
  -2,918
  -3,056
  -3,200
  -3,353
  -3,513
  -3,682
  -3,860
  -4,047
New CAPEX, $m
  -454
  -540
  -617
  -693
  -768
  -843
  -918
  -993
  -1,070
  -1,149
  -1,229
  -1,311
  -1,396
  -1,484
  -1,574
  -1,668
  -1,766
  -1,868
  -1,973
  -2,084
  -2,199
  -2,319
  -2,444
  -2,575
  -2,712
  -2,855
  -3,006
  -3,163
  -3,327
  -3,500
Cash from investing activities, $m
  -1,748
  -1,859
  -1,967
  -2,077
  -2,191
  -2,310
  -2,432
  -2,559
  -2,691
  -2,830
  -2,975
  -3,126
  -3,285
  -3,451
  -3,624
  -3,807
  -3,999
  -4,200
  -4,410
  -4,632
  -4,864
  -5,107
  -5,362
  -5,631
  -5,912
  -6,208
  -6,519
  -6,845
  -7,187
  -7,547
Free cash flow, $m
  4,001
  4,285
  4,330
  4,389
  4,464
  4,552
  4,653
  4,768
  4,896
  5,036
  5,126
  5,293
  5,473
  5,667
  5,875
  6,097
  6,334
  6,586
  6,854
  7,138
  7,439
  7,757
  8,093
  8,449
  8,824
  9,220
  9,637
  10,077
  10,540
  11,028
Issuance/(repayment) of debt, $m
  -6,036
  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  
  -3,511
  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
  490
  4,999
  5,146
  5,306
  5,479
  5,665
  5,866
  6,081
  6,310
  6,554
  6,750
  7,026
  7,318
  7,628
  7,956
  8,302
  8,668
  9,054
  9,462
  9,891
  10,344
  10,821
  11,323
  11,851
  12,408
  12,993
  13,609
  14,256
  14,937
  15,653
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
  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 available for distribution, $m
  -6,226
  4,920
  5,055
  5,204
  5,366
  5,542
  5,731
  5,935
  6,153
  6,386
  6,569
  6,833
  7,113
  7,410
  7,725
  8,057
  8,409
  8,780
  9,172
  9,585
  10,021
  10,480
  10,964
  11,473
  12,009
  12,574
  13,167
  13,792
  14,449
  15,139
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
  -5,515
  3,816
  3,392
  2,982
  2,590
  2,221
  1,877
  1,563
  1,280
  1,030
  806
  625
  474
  352
  255
  180
  124
  83
  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 32.2
Price to Sales 6.1
Price to Book -68.4
Price to Tangible Book
Price to Cash Flow 24.9
Price to Free Cash Flow 35.6
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 $22820.4 million for the last fiscal year's total revenue generated by McDonald's. The default revenue input number comes from 0001 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%.

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 100.9%.

Life of production assets of 17.8 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 -0.1%. 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 775.8 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 $142.8 billion.

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