Stock Analysis on Net

PayPal Holdings Inc. (NASDAQ:PYPL)

Analysis of Operating Leases

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Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

PayPal Holdings Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total undiscounted future operating lease payments 664  555  552 
Discount rate1 3.34% 2.78% 0.00%
 
Total present value of future operating lease payments 586  504  552 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Weighted-average interest rate for PayPal Holdings Inc. debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.34%
2019 124  2019 124  120 
2020 111  2020 111  104 
2021 96  2021 96  87 
2022 81  2022 81  71 
2023 63  2023 63  53 
2024 and thereafter 189  2024 63  52 
2025 63  50 
2026 63  48 
Total: 664  664  586 

Based on: 10-K (reporting date: 2018-12-31).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.78%
2018 119  2018 119  116 
2019 112  2019 112  106 
2020 82  2020 82  76 
2021 62  2021 62  56 
2022 50  2022 50  44 
2023 and thereafter 130  2023 50  42 
2024 50  41 
2025 30  24 
Total: 555  555  504 

Based on: 10-K (reporting date: 2017-12-31).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 0.00%
2017 102  2017 102  102 
2018 106  2018 106  106 
2019 93  2019 93  93 
2020 63  2020 63  63 
2021 47  2021 47  47 
2022 and thereafter 141  2022 47  47 
2023 47  47 
2024 47  47 
Total: 552  552  552 

Based on: 10-K (reporting date: 2016-12-31).


Adjustments to Financial Statements for Operating Leases

PayPal Holdings Inc., adjustments to financial statements

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported) 70,379  51,333  43,332  40,774  33,103 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  —  586  504  552 
Total assets (adjusted) 70,379  51,333  43,918  41,278  33,655 
Adjustment to Total Debt
Total debt (as reported) 8,939  4,965  1,998  1,000  — 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  —  586  504  552 
Add: Other current operating lease liabilities (included in Accrued expenses and other current liabilities) 144  104  —  —  — 
Add: Operating lease liabilities (included in Deferred tax liability and other long-term liabilities) 642  403  —  —  — 
Total debt (adjusted) 9,725  5,472  2,584  1,504  552 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1, 2 Equal to total present value of future operating lease payments.


PayPal Holdings Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

PayPal Holdings Inc., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total Asset Turnover1
Reported total asset turnover 0.30 0.35 0.36 0.32 0.33
Adjusted total asset turnover 0.30 0.35 0.35 0.32 0.32
Debt to Equity2
Reported debt to equity 0.45 0.29 0.13 0.06 0.00
Adjusted debt to equity 0.49 0.32 0.17 0.09 0.04
Return on Assets3 (ROA)
Reported ROA 5.97% 4.79% 4.75% 4.40% 4.23%
Adjusted ROA 5.97% 4.79% 4.68% 4.35% 4.16%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. PayPal Holdings Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. PayPal Holdings Inc. adjusted debt to equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. PayPal Holdings Inc. adjusted ROA improved from 2018 to 2019 and from 2019 to 2020.

PayPal Holdings Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net revenues 21,454  17,772  15,451  13,094  10,842 
Total assets 70,379  51,333  43,332  40,774  33,103 
Activity Ratio
Total asset turnover1 0.30 0.35 0.36 0.32 0.33
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net revenues 21,454  17,772  15,451  13,094  10,842 
Adjusted total assets 70,379  51,333  43,918  41,278  33,655 
Activity Ratio
Adjusted total asset turnover2 0.30 0.35 0.35 0.32 0.32

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Total asset turnover = Net revenues ÷ Total assets
= 21,454 ÷ 70,379 = 0.30

2 Adjusted total asset turnover = Net revenues ÷ Adjusted total assets
= 21,454 ÷ 70,379 = 0.30

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. PayPal Holdings Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Debt to Equity

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total debt 8,939  4,965  1,998  1,000  — 
Total PayPal stockholders’ equity 20,019  16,885  15,386  15,994  14,712 
Solvency Ratio
Debt to equity1 0.45 0.29 0.13 0.06 0.00
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 9,725  5,472  2,584  1,504  552 
Total PayPal stockholders’ equity 20,019  16,885  15,386  15,994  14,712 
Solvency Ratio
Adjusted debt to equity2 0.49 0.32 0.17 0.09 0.04

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Debt to equity = Total debt ÷ Total PayPal stockholders’ equity
= 8,939 ÷ 20,019 = 0.45

2 Adjusted debt to equity = Adjusted total debt ÷ Total PayPal stockholders’ equity
= 9,725 ÷ 20,019 = 0.49

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. PayPal Holdings Inc. adjusted debt-to-equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 4,202  2,459  2,057  1,795  1,401 
Total assets 70,379  51,333  43,332  40,774  33,103 
Profitability Ratio
ROA1 5.97% 4.79% 4.75% 4.40% 4.23%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income 4,202  2,459  2,057  1,795  1,401 
Adjusted total assets 70,379  51,333  43,918  41,278  33,655 
Profitability Ratio
Adjusted ROA2 5.97% 4.79% 4.68% 4.35% 4.16%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 4,202 ÷ 70,379 = 5.97%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 4,202 ÷ 70,379 = 5.97%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. PayPal Holdings Inc. adjusted ROA improved from 2018 to 2019 and from 2019 to 2020.