Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Mastercard Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	9,930)	8,687)	6,411)	8,118)	5,859)
Amortization of customer and merchant incentives	1,586)	1,371)	1,072)	1,141)	1,235)
Depreciation and amortization	750)	726)	580)	522)	459)
(Gains) losses on equity investments, net	145)	(645)	(30)	(167)	—)
Share-based compensation	295)	273)	254)	250)	196)
Deferred income taxes	(651)	(69)	73)	(7)	(244)
Other	44)	36)	14)	24)	31)
Accounts receivable	(481)	(397)	(86)	(246)	(317)
Income taxes receivable	12)	(87)	(2)	(202)	(120)
Settlement assets	48)	390)	1,288)	(444)	(1,078)
Prepaid expenses	(2,175)	(2,087)	(1,552)	(1,661)	(1,769)
Accrued litigation and legal settlements	240)	(1)	(73)	(662)	869)
Restricted security deposits held for customers	(305)	177)	326)	290)	(6)
Accounts payable	190)	100)	26)	(42)	101)
Settlement obligations	201)	(568)	(1,242)	477)	849)
Accrued expenses	1,188)	1,355)	(114)	657)	439)
Long-term taxes payable	(121)	(52)	(37)	2)	(20)
Net change in other assets and liabilities	299)	254)	316)	133)	(261)
Changes in operating assets and liabilities	(904)	(916)	(1,150)	(1,698)	(1,313)
Adjustments to reconcile net income to net cash provided by operating activities	1,265)	776)	813)	65)	364)
Net cash provided by operating activities	11,195)	9,463)	7,224)	8,183)	6,223)
Purchases of investment securities available-for-sale	(267)	(389)	(220)	(643)	(1,300)
Purchases of investments held-to-maturity	(239)	(294)	(198)	(215)	(509)
Proceeds from sales of investment securities available-for-sale	54)	83)	361)	1,098)	604)
Proceeds from maturities of investment securities available-for-sale	211)	291)	140)	376)	379)
Proceeds from maturities of investments held-to-maturity	265)	296)	121)	383)	929)
Purchases of property and equipment	(442)	(407)	(339)	(422)	(330)
Capitalized software	(655)	(407)	(369)	(306)	(174)
Purchases of equity investments	(88)	(228)	(214)	(467)	(91)
Proceeds from sales of equity investments	7)	186)	—)	—)	—)
Acquisition of businesses, net of cash acquired	(313)	(4,436)	(989)	(1,440)	—)
Settlement of interest rate derivative contracts	—)	—)	(175)	—)	—)
Other investing activities	(3)	33)	3)	(4)	(14)
Net cash used in investing activities	(1,470)	(5,272)	(1,879)	(1,640)	(506)
Purchases of treasury stock	(8,753)	(5,904)	(4,473)	(6,497)	(4,933)
Dividends paid	(1,903)	(1,741)	(1,605)	(1,345)	(1,044)
Proceeds from debt, net	1,123)	2,024)	3,959)	2,724)	991)
Payment of debt	(724)	(650)	—)	(500)	—)
Acquisition of redeemable non-controlling interests	(4)	—)	(49)	—)	—)
Acquisition of non-controlling interest	—)	(133)	—)	—)	—)
Contingent consideration paid	—)	(64)	—)	(199)	—)
Tax withholdings related to share-based payments	(141)	(133)	(150)	(161)	(80)
Cash proceeds from exercise of stock options	90)	61)	97)	126)	104)
Other financing activities	(16)	(15)	69)	(15)	(4)
Net cash used in financing activities	(10,328)	(6,555)	(2,152)	(5,867)	(4,966)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(103)	(153)	257)	(44)	(6)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	(706)	(2,517)	3,450)	632)	745)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	9,902)	12,419)	8,969)	8,337)	7,592)
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	9,196)	9,902)	12,419)	8,969)	8,337)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Operating cash flow demonstrates a strong upward trajectory over the five-year period, increasing from 6,223 million US dollars in 2018 to 11,195 million US dollars in 2022. This growth is primarily driven by a consistent rise in net income, which grew from 5,859 million US dollars to 9,930 million US dollars, despite a temporary contraction in 2020. The conversion of net income to operating cash remains high, supported by significant non-cash adjustments, most notably the amortization of customer and merchant incentives, which consistently exceeded 1 billion US dollars annually from 2018 to 2022.

Operating Cash Flow Dynamics: A consistent pattern of positive cash generation is observed, with net cash provided by operating activities expanding by approximately 80% over the period. While changes in operating assets and liabilities generally acted as a drag on cash flow, the impact was mitigated by the scale of net income and non-cash add-backs. Notably, share-based compensation costs showed a gradual increase, rising from 196 million US dollars in 2018 to 295 million US dollars in 2022.
Investment and Strategic Expenditures: Investing activities are characterized by a mix of strategic acquisitions and steady capital expenditures. A significant spike in cash outflows occurred in 2021, where net cash used in investing activities reached 5,272 million US dollars, largely due to 4,436 million US dollars spent on the acquisition of businesses. There is a visible trend of increasing investment in digital infrastructure, as evidenced by capitalized software costs rising from 174 million US dollars in 2018 to 655 million US dollars in 2022. Purchases of property and equipment also trended upward, ending at 442 million US dollars in 2022.
Financing and Shareholder Returns: The financing strategy emphasizes aggressive shareholder returns through dividends and share repurchases. Purchases of treasury stock increased substantially, peaking at 8,753 million US dollars in 2022 compared to 4,933 million US dollars in 2018. Dividends paid also grew steadily, from 1,044 million US dollars in 2018 to 1,903 million US dollars in 2022. These outflows were partially offset by net proceeds from debt, although debt issuance slowed in 2022 to 1,123 million US dollars relative to a peak of 3,959 million US dollars in 2020.
Liquidity and Cash Position: The company maintained a robust liquidity position, with cash and equivalents ending the period at 9,196 million US dollars in 2022. The cash balance peaked in 2020 at 12,419 million US dollars, coinciding with lower financing outflows and high debt proceeds. The subsequent decline in the cash balance through 2021 and 2022 reflects the intensified focus on share buybacks and strategic acquisitions.

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Mastercard Inc. (NYSE:MA)

Cash Flow Statement