In this unit, you will provide a brief written analysis of the ratios for Mastercard. Evaluation should be submitted in an MS Word document of no more than three pages and be concise, clear and professional.
Directions
Evaluation of Mastercard should include:
- A discussion of the ratios calculated in relation to the respective financial diagnostic categories (profitability, liquidity, leverage, operating returns).
- Discuss the importance of the ratio in financial analysis.
- Other information pertinent to Mastercard which could affect their future performance and stock price.
Ratios
| 2017 | 2018 | 2019 | Formulas | |
| PROFITABILITY RATIOS | ||||
| MC GROSS MARGIN | 78.50% | 78.50% | 79.05% | Gross Profit / Sales |
| MC OPERATION MARGIN | 53.96% | 56.01% | 57.43% | Operating Income / Sales |
| MC NETPROFIT MARGIN | 31.33% | 39.19% | 48.08% | Net Income / Sales |
| LIQUIDITY RATIO | ||||
| MC CURRENT RATIO | 1.57 | 1.39 | 1.42 | Current Assets / Current Liabilities |
| MC CASH RATIO | 0.67 | 0.58 | 0.59 | Cash / Current Liabilities |
| LEVERAGE RATIOS | ||||
| MC DEBT TO EQUITY | 2.88 | 3.59 | 3.94 | Total Debt / Value of Equity |
| OPERATION RETURNS | ||||
| MC ROE | 71.22% | 108.14% | 137.20% | Net Income / Book Value of Equity |
| MC ROA | 19.08% | 24.32% | 28.53% | ( Net Income + Interest Expense ) / Book Value of Assets |
| *** There is no interest expense in any year |
MA Income Statement
| MA_IncomeStatement_Annual_As_Originally_Reported | 2017 | 2018 | 2019 |
| Gross Profit | 9,810,000,000 | 11,736,000,000 | 13,346,000,000 |
| Total Revenue | 12,497,000,000 | 14,950,000,000 | 16,883,000,000 |
| Business Revenue | 15,492,000,000 | 18,483,000,000 | 20,856,000,000 |
| Sales Return and Allowances/Discounts | -5,848,000,000 | -6,881,000,000 | -8,097,000,000 |
| Other Revenue | 2,853,000,000 | 3,348,000,000 | 4,124,000,000 |
| Cost of Revenue | -2,687,000,000 | -3,214,000,000 | -3,537,000,000 |
| Staff Cost, Cost of Revenue | -2,687,000,000 | -3,214,000,000 | -3,537,000,000 |
| Operating Income/Expenses | -3,067,000,000 | -3,362,000,000 | -3,650,000,000 |
| Selling, General and Administrative Expenses | -2,631,000,000 | -2,903,000,000 | -3,128,000,000 |
| General and Administrative Expenses | -1,378,000,000 | -1,619,000,000 | -1,747,000,000 |
| Legal, Accounting, Auditing and Consulting Fees | -355,000,000 | -377,000,000 | -447,000,000 |
| Selling and Marketing Expenses | -898,000,000 | -907,000,000 | -934,000,000 |
| Staff Costs | 0 | 0 | 0 |
| Depreciation, Amortization and Depletion | -436,000,000 | -459,000,000 | -522,000,000 |
| Depreciation and Amortization | -436,000,000 | -459,000,000 | -522,000,000 |
| Provision Expense/Write-Back | |||
| Provision for Doubtful Accounts | |||
| Total Operating Profit/Loss | 6,743,000,000 | 8,374,000,000 | 9,696,000,000 |
| Non-Operating Income/Expenses, Total | -221,000,000 | -1,170,000,000 | 35,000,000 |
| Total Net Finance Income/Expense | -154,000,000 | -186,000,000 | -224,000,000 |
| Net Interest Income/Expense | -154,000,000 | -186,000,000 | -224,000,000 |
| Interest Expense Net of Capitalized Interest | -154,000,000 | -186,000,000 | -224,000,000 |
| Interest Income | |||
| Net Investment Income | -50,000,000 | 158,000,000 | 232,000,000 |
| Gain/Loss on Investments and Other Financial Instruments | 167,000,000 | ||
| Gain/Loss on Foreign Exchange | -106,000,000 | 36,000,000 | -32,000,000 |
| Other Investment Income | 56,000,000 | 122,000,000 | 97,000,000 |
| Irregular Income/Expenses | -15,000,000 | -1,128,000,000 | 0 |
| Litigation Income/Expense | -15,000,000 | -1,128,000,000 | 0 |
| Other Income/Expense, Non-Operating | -2,000,000 | -14,000,000 | 27,000,000 |
| Pretax Income | 6,522,000,000 | 7,204,000,000 | 9,731,000,000 |
| Provision for Income Tax | -2,607,000,000 | -1,345,000,000 | -1,613,000,000 |
| Net Income from Continuing Operations | 3,915,000,000 | 5,859,000,000 | 8,118,000,000 |
| Net Income after Extraordinary Items and Discontinued Operations | 3,915,000,000 | 5,859,000,000 | 8,118,000,000 |
| Net Income after Non-Controlling/Minority Interests | 3,915,000,000 | 5,859,000,000 | 8,118,000,000 |
| Net Income Available to Common Stockholders | 3,915,000,000 | 5,859,000,000 | 8,118,000,000 |
| Diluted Net Income Available to Common Stockholders | 3,915,000,000 | 5,859,000,000 | 8,118,000,000 |
| Non-Controlling/Minority Interests | |||
| Reported Total Revenue | 12,497,000,000 | 14,950,000,000 | 16,883,000,000 |
| Reported Operating Expense | -5,875,000,000 | -7,668,000,000 | -7,219,000,000 |
| Reported Total Operating Profit/Loss | 6,622,000,000 | 7,282,000,000 | 9,664,000,000 |
| Reported Normalized Income | 4,906,000,000 | 6,792,000,000 | 7,937,000,000 |
| Reported Effective Tax Rate | 0 | 0 | 0 |
| Reported Normalized Operating Profit | |||
| Basic EPS | 3.67 | 5.63 | 7.98 |
| Diluted EPS | 3.65 | 5.60 | 7.94 |
| Basic WASO | 1,067,000,016 | 1,041,000,015 | 1,017,000,015 |
| Diluted WASO | 1,072,000,016 | 1,047,000,015 | 1,022,000,015 |
| Fiscal year ends in Dec 31 | USD |
MA Balance Sheet
| MA_BalanceSheet_Annual_As_Originally_Reported | 2017 | 2018 | 2019 |
| Total Assets | 21,329,000,000 | 24,860,000,000 | 29,236,000,000 |
| Total Current Assets | 13,797,000,000 | 16,171,000,000 | 16,902,000,000 |
| Cash, Cash Equivalents and Short Term Investments | 7,782,000,000 | 8,378,000,000 | 7,676,000,000 |
| Cash and Cash Equivalents | 5,933,000,000 | 6,682,000,000 | 6,988,000,000 |
| Short Term Investments | 1,849,000,000 | 1,696,000,000 | 688,000,000 |
| Available-for-Sale Securities, Current | 1,849,000,000 | 1,696,000,000 | 688,000,000 |
| Held-to-Maturity Securities, Current | |||
| Cash Restricted or Pledged, Current | 1,631,000,000 | 1,633,000,000 | 1,954,000,000 |
| Trade and Other Receivables, Current | 3,344,000,000 | 4,728,000,000 | 5,509,000,000 |
| Trade/Accounts Receivable, Current | 3,344,000,000 | 4,728,000,000 | 5,509,000,000 |
| Taxes Receivable, Current | |||
| Other Receivables, Current | |||
| Prepayments and Deposits, Current | 77,000,000 | 51,000,000 | 105,000,000 |
| Other Current Assets | 963,000,000 | 1,381,000,000 | 1,658,000,000 |
| Deferred Tax Assets, Current | |||
| Deferred Costs/Assets, Current | |||
| Total Non-Current Assets | 7,532,000,000 | 8,689,000,000 | 12,334,000,000 |
| Net Property, Plant and Equipment | 829,000,000 | 921,000,000 | 1,828,000,000 |
| Gross Property, Plant and Equipment | 1,543,000,000 | 1,768,000,000 | 2,928,000,000 |
| Properties | 621,000,000 | 696,000,000 | 808,000,000 |
| Buildings and Improvements | 455,000,000 | 481,000,000 | 505,000,000 |
| Leasehold and Improvements | 166,000,000 | 215,000,000 | 303,000,000 |
| Machinery, Furniture and Equipment | 81,000,000 | 85,000,000 | 92,000,000 |
| Furniture, Fixtures and Office Equipment | 81,000,000 | 85,000,000 | 92,000,000 |
| Other Equipment | 0 | 0 | 0 |
| Leased Property, Plant and Equipment | 810,000,000 | ||
| Other Property, Plant and Equipment | 841,000,000 | 987,000,000 | 1,218,000,000 |
| Accumulated Depreciation and Impairment | -714,000,000 | -847,000,000 | -1,100,000,000 |
| Accumulated Depreciation | -714,000,000 | -847,000,000 | -1,100,000,000 |
| Net Intangible Assets | 4,155,000,000 | 3,895,000,000 | 5,438,000,000 |
| Gross Goodwill and Other Intangible Assets | 5,312,000,000 | 5,070,000,000 | 6,734,000,000 |
| Goodwill | 3,035,000,000 | 2,904,000,000 | 4,021,000,000 |
| Intangibles other than Goodwill | 2,277,000,000 | 2,166,000,000 | 2,713,000,000 |
| Software and Technology | 1,572,000,000 | 1,514,000,000 | 1,884,000,000 |
| Customer Relationships | 648,000,000 | 606,000,000 | 785,000,000 |
| Other Intangible Assets | 27,000,000 | 46,000,000 | 44,000,000 |
| Trademarks and Patents | 30,000,000 | ||
| Accumulated Amortization and Impairment | -1,157,000,000 | -1,175,000,000 | -1,296,000,000 |
| Accumulated Amortization of Intangible Assets | -1,157,000,000 | -1,175,000,000 | -1,296,000,000 |
| Accumulated Amortization of Intangibles other than Goodwill | -1,157,000,000 | -1,175,000,000 | -1,296,000,000 |
| Accumulated Amortization of Software and Technology | -888,000,000 | -898,000,000 | -988,000,000 |
| Accumulated Amortization of Customer Relationships | -214,000,000 | -232,000,000 | -264,000,000 |
| Accumulated Amortization of Other Intangible Assets | -26,000,000 | -45,000,000 | -44,000,000 |
| Accumulated Amortization of Trademarks and Patents | -29,000,000 | ||
| Total Long Term Investments | 249,000,000 | 337,000,000 | 914,000,000 |
| Investment in Financial Assets, Non-Current | 249,000,000 | 337,000,000 | 914,000,000 |
| Equity Securities/Shares, Non-Current | 249,000,000 | 337,000,000 | 914,000,000 |
| Financial Investment Securities, Available-for-Sale & Held-to-Maturity, Non-Current | |||
| Available-for-Sale Securities, Non-Current | |||
| Held-to-Maturity Securities, Non-Current | |||
| Trade and Other Receivables, Non-Current | 178,000,000 | 298,000,000 | 460,000,000 |
| Taxes Receivable, Non-Current | 178,000,000 | 298,000,000 | 460,000,000 |
| Deferred Tax Assets, Non-Current | 250,000,000 | 570,000,000 | 543,000,000 |
| Other Non-Current Assets | 1,519,000,000 | 2,668,000,000 | 3,151,000,000 |
| Prepayments and Deposits, Non-Current | 352,000,000 | 0 | |
| Prepayments, Non-Current | 352,000,000 | 0 | |
| Deferred Costs/Assets, Non-Current | |||
| Total Liabilities | 15,832,000,000 | 19,442,000,000 | 23,319,000,000 |
| Total Current Liabilities | 8,793,000,000 | 11,593,000,000 | 11,904,000,000 |
| Payables and Accrued Expenses, Current | 6,916,000,000 | 9,064,000,000 | 9,606,000,000 |
| Trade and Other Payables, Current | 2,470,000,000 | 2,884,000,000 | 3,535,000,000 |