Stock Analysis on Net

Mastercard Inc. (NYSE:MA)

$19.99

Analysis of Income Taxes

Microsoft Excel LibreOffice Calc

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Income Tax Expense (Benefit)

Mastercard Inc., income tax expense (benefit), continuing operations

US$ in millions

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12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Federal
State and local
Foreign
Current
Federal
State and local
Foreign
Deferred
Income tax expense

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).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Mastercard Inc. current increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Mastercard Inc. deferred increased from 2018 to 2019 and from 2019 to 2020.
Income tax expense Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Mastercard Inc. income tax expense increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level.

Effective Income Tax Rate (EITR)

Mastercard Inc., effective income tax rate (EITR) reconciliation

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
U.S. federal statutory income tax rate
State tax effect, net of federal benefit
Foreign tax effect
European Commission fine
Foreign tax credits
Windfall benefit
Other, net
Effective income tax rate, before U.S. tax reform
Transition Tax
Remeasurement of deferred taxes
Effective income tax rate

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).

Item Description The company
Effective income tax rate, before U.S. tax reform Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Mastercard Inc. effective income tax rate, before U.S. tax reform decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Components of Deferred Tax Assets and Liabilities

Mastercard Inc., components of deferred tax assets and liabilities

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Accrued liabilities
Compensation and benefits
State taxes and other credits
Net operating and capital losses
Unrealized gain/loss - 2015 EUR Notes
U.S. foreign tax credits
Recoverable basis of deconsolidated entities
Intangible assets
Other items
Deferred tax assets, gross
Valuation allowance
Deferred tax assets, net
Prepaid expenses and other accruals
Goodwill and intangible assets
Property, plant and equipment
Unrealized gain/loss - 2015 EUR Notes
Previously taxed earnings and profits
Other items
Deferred tax liabilities
Net deferred tax assets (liabilities)

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).

Item Description The company
Deferred tax assets, gross Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Mastercard Inc. deferred tax assets, gross increased from 2018 to 2019 and from 2019 to 2020.
Deferred tax assets, net Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Mastercard Inc. deferred tax assets, net increased from 2018 to 2019 and from 2019 to 2020.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Mastercard Inc. net deferred tax assets (liabilities) decreased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

Mastercard Inc., deferred tax assets and liabilities, classification

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Deferred tax assets
Deferred tax liabilities

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).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Mastercard Inc. deferred tax assets decreased from 2018 to 2019 and from 2019 to 2020.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Mastercard Inc. deferred tax liabilities increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

Mastercard 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)
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Total Mastercard Incorporated Stockholders’ Equity
Total Mastercard Incorporated stockholders’ equity (as reported)
Less: Net deferred tax assets (liabilities)
Total Mastercard Incorporated stockholders’ equity (adjusted)
Adjustment to Net Income
Net income (as reported)
Add: Deferred income tax expense (benefit)
Net income (adjusted)

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).


Mastercard Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Mastercard Inc., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

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 net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Mastercard Inc. adjusted net profit margin ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Mastercard Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Mastercard Inc. adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Mastercard Inc. adjusted ROE improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Mastercard Inc. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Mastercard Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

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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
Net revenue
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income
Net revenue
Profitability Ratio
Adjusted net profit margin2

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 Net profit margin = 100 × Net income ÷ Net revenue
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net revenue
= 100 × ÷ =

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Mastercard Inc. adjusted net profit margin ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

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 revenue
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net revenue
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

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 revenue ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Net revenue ÷ Adjusted total assets
= ÷ =

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

Adjusted Financial Leverage

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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 assets
Total Mastercard Incorporated stockholders’ equity
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets
Adjusted total Mastercard Incorporated stockholders’ equity
Solvency Ratio
Adjusted financial leverage2

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 Financial leverage = Total assets ÷ Total Mastercard Incorporated stockholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Mastercard Incorporated stockholders’ equity
= ÷ =

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Mastercard Inc. adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

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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
Total Mastercard Incorporated stockholders’ equity
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income
Adjusted total Mastercard Incorporated stockholders’ equity
Profitability Ratio
Adjusted ROE2

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 ROE = 100 × Net income ÷ Total Mastercard Incorporated stockholders’ equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted total Mastercard Incorporated stockholders’ equity
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Mastercard Inc. adjusted ROE improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
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
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income
Adjusted total assets
Profitability Ratio
Adjusted ROA2

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 × ÷ =

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Mastercard Inc. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.