McDonald's (MCD) 10-K2015 FY Annual report

Filed: 25 Feb 16, 12:00am

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Exhibit 12. Computation of Ratios

Ratio of Earnings to Fixed Charges
Dollars in millions	Years ended December 31, 2015			2014			2013		2012		2011
Earnings available for fixed charges
Income before provision for income taxes		$	6,555.7	$	7,372.0		$	8,204.5	$	8,079.0	$	8,012.2
Noncontrolling interest expense in operating results of majority-owned subsidiaries less equity in undistributed operating results of less than 50%-owned affiliates		7.3		6.3			9.0		11.1		13.3
Income tax provision (benefit) of 50%-owned affiliates included in income from continuing operations before provision for income taxes		3.7		(0.1		)	23.8		64.0		65.5
Portion of rent charges (after reduction for rental income from subleased properties) considered to be representative of interest factors*		365.1		374.6			374.6		358.1		339.4
Interest expense, amortization of debt discount and issuance costs, and depreciation of capitalized interest*		660.4		596.1			548.9		550.1		520.5
		$	7,592.2	$	8,348.9		$	9,160.8	$	9,062.3	$	8,950.9
Fixed charges
Portion of rent charges (after reduction for rental income from subleased properties) considered to be representative of interest factors*		$	365.1	$	374.6		$	374.6	$	358.1	$	339.4
Interest expense, amortization of debt discount and issuance costs*		643.7		579.8			532.1		532.8		503.0
Capitalized interest*		9.4		14.8			15.6		16.1		14.0
		$	1,018.2	$	969.2		$	922.3	$	907.0	$	856.4
Ratio of earnings to fixed charges		7.46		8.61			9.93		9.99		10.45


*	Includes amounts of the Company and its majority-owned subsidiaries, and one-half of the amounts of 50%-owned affiliates. The Company records interest expense on unrecognized tax benefits in the provision for income taxes. This interest is not included in the computation of fixed charges.



Return on Average Assets
Dollars in millions	Years ended December 31, 2015				2014			2013
Operating income		$	7,145.5		$	7,949.2		$	8,764.3
Average assets⁽¹⁾		$	34,137.6		$	36,456.0		$	35,406.0
Return on average assets		20.9		%	21.8		%	24.8		%


(1)	Represents the average of the month-end balances of total assets for the past 13 months.



Return on Average Common Equity
Dollars in millions	Years ended December 31, 2015				2014			2013
Net income		$	4,529.3		$	4,757.8		$	5,585.9
Average shareholders' equity⁽¹⁾		$	10,034.3		$	15,178.0		$	15,581.7
Return on average common equity		45.1		%	31.3		%	35.8		%


(1)	Represents the average of the month-end balances of shareholders' equity for the past 13 months.



Fixed-Rate Debt as a Percent of Total Debt⁽¹⁾⁽²⁾
Dollars in millions	Years ended December 31, 2015				2014			2013
Total debt obligations		$	24,122.1		$	14,935.7		$	14,129.8
Fair value adjustments		(1.8		)	(4.7		)	(12.8		)
Deferred debt costs		106.0			54.0			0.0
Debt obligations before fair value adjustments and deferred debt costs		$	24,226.3		$	14,985.0		$	14,117.0
Fixed-rate debt		$	19,611.3		$	11,155.3		$	10,489.5
Fixed-rate debt as a percent of total debt		81		%	74		%	74		%


(1)	Based on debt obligations before the effects of fair value hedging adjustments and deferred debt costs. These effects are excluded as they have no impact on the obligation at maturity. See Debt financing note to the consolidated financial statements.


(2)	Includes the effect of interest rate swaps.



Foreign Currency-Denominated Debt as a Percent of Total Debt⁽¹⁾
Dollars in millions	Years ended December 31, 2015				2014			2013
Total debt obligations		$	24,122.1		$	14,935.7		$	14,129.8
Fair value adjustments		(1.8		)	(4.7		)	(12.8		)
Deferred debt costs		106.0			54.0			0.0
Debt obligations before fair value adjustments and deferred debt costs		$	24,226.3		$	14,985.0		$	14,117.0
Foreign currency-denominated debt		$	7,016.1		$	5,930.3		$	5,756.4
Foreign currency-denominated debt as a percent of total debt		29		%	40		%	41		%


(1)	Based on debt obligations before the effects of fair value hedging adjustments and deferred debt costs. These effects are excluded as they have no impact on the obligation at maturity. See Debt financing note to the consolidated financial statements.



Total Debt as a Percent of Total Capitalization⁽¹⁾⁽²⁾
Dollars in millions	Years ended December 31, 2015				2014			2013
Total debt obligations		$	24,122.1		$	14,935.7		$	14,129.8
Fair value adjustments		(1.8		)	(4.7		)	(12.8		)
Deferred debt costs		106.0			54.0			0.0
Debt obligations before fair value adjustments and deferred debt costs		$	24,226.3		$	14,985.0		$	14,117.0
Total capitalization		$	31,314.2		$	27,838.4		$	30,126.7
Total debt as a percent of total capitalization		77		%	54		%	47		%


(1)	Based on debt obligations before the effects of fair value hedging adjustments and deferred debt costs. These effects are excluded as they have no impact on the obligation at maturity. See Debt financing note to the consolidated financial statements.


(2)	Total capitalization represents debt obligations before fair value adjustments and deferred debt costs, and total shareholders' equity.



Cash Provided by Operations as a Percent of Total Debt⁽¹⁾
Dollars in millions	Years ended December 31, 2015				2014			2013
Total debt obligations		$	24,122.1		$	14,935.7		$	14,129.8
Fair value adjustments		(1.8		)	(4.7		)	(12.8		)
Deferred debt costs		106.0			54.0			0.0
Debt obligations before fair value adjustments and deferred debt costs		$	24,226.3		$	14,985.0		$	14,117.0
Cash provided by operations		$	6,539.1		$	6,730.3		$	7,120.7
Cash provided by operations as a percent of total debt		27		%	45		%	50		%


(1)	Based on debt obligations before the effects of fair value hedging adjustments and deferred debt costs. These effects are excluded as they have no impact on the obligation at maturity. See Debt financing note to the consolidated financial statements.



Return on Incremental Invested Capital

See Part II, Item 7, page 28 of this Form 10-K for the calculation.

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