Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
McDonald’s delivered a higher free cash flow and an improved free cash flow margin compared to both the prior quarter and the same quarter last year. Revenue was stable sequentially while operating cash flow rose.
- Operating cash flow increased relative to revenue, driving a higher free cash flow margin. Capital expenditure was lower than the prior quarter but higher than a year ago, yet free cash flow still improved.
- Compared to the immediate prior quarter, free cash flow margin strengthened as operating cash flow improved and capital spending eased. Versus the same quarter one year earlier, both operating cash flow and free cash flow were higher, though capital expenditure also increased.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$5.7B
Trailing twelve-month free cash flow.
Quarter free cash flow
$1.9B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$2.4B
Cash generated by operations before capital spending.
CapEx
$503.0M
Capital spending and related asset purchases.
FCF margin
32.5%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2022-06-30 | $5.7B | $618.1M | $437.9M | $180.2M | 3.2% |
| 2022-09-30 | $5.9B | $2.4B | $531.2M | $1.9B | 32.4% |
| 2022-12-31 | $5.9B | $2.2B | $528.7M | $1.7B | 28.2% |
| 2023-03-31 | $5.9B | $2.4B | $503.0M | $1.9B | 32.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 106.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 8.5% | Lower capital intensity usually supports FCF margin. |
| Net cash | n/a | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Stronger operating cash flow
Operating cash flow rose both sequentially and year over year, outpacing the change in revenue and directly lifting free cash flow.
The improvement in operating cash flow was the primary factor behind the higher free cash flow margin.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow increased relative to revenue, driving a higher free cash flow margin. Capital expenditure was lower than the prior quarter but higher than a year ago, yet free cash flow still improved.
Compared to the immediate prior quarter, free cash flow margin strengthened as operating cash flow improved and capital spending eased. Versus the same quarter one year earlier, both operating cash flow and free cash flow were higher, though capital expenditure also increased.
Monitor the trajectory of capital expenditure, which increased year over year despite a quarterly decline.