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.
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- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2006
- Price to Operating Profit (P/OP) since 2006
- Analysis of Revenues
- Analysis of Debt
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Mastercard Inc., consolidated cash flow statement
US$ in millions
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).
- Net Income and Profitability Trends
- Net income displayed an overall upward trajectory from 2018 through 2022, increasing from $5.859 billion to $9.930 billion. There was a decline in 2020 relative to 2019, likely reflecting pandemic-related impacts, but this was followed by a strong recovery in 2021 and continued growth in 2022.
- Amortization and Depreciation
- Amortization of customer and merchant incentives grew steadily, with a marked increase in 2021 and 2022, reaching $1.586 billion. Depreciation and amortization expenses also increased consistently over the period, from $459 million to $750 million, indicating increasing investment in capital assets and software.
- Equity Investments and Related Gains/Losses
- Gains and losses on equity investments fluctuated, with notable losses in 2019, 2020, and 2021, particularly a substantial loss of $645 million in 2021. However, this was followed by a gain of $145 million in 2022. Purchases of equity investments peaked in 2019 but declined thereafter, while proceeds from sales appeared primarily in 2021 and 2022, suggesting selective divestitures.
- Share-Based Compensation and Deferred Taxes
- Share-based compensation steadily increased each year, reflecting growing employee incentives or compensation costs. Deferred income taxes showed volatility, with negative values in most years except 2020, indicating fluctuations in tax payments or adjustments.
- Working Capital Components
- Accounts receivable tended to increase as negative adjustments became larger, suggesting tighter receivables management or timing differences. Settlement assets and settlement obligations demonstrated volatility; notably, settlement assets shifted from negative to positive in 2020 before declining again. Prepaid expenses consistently increased in negative magnitude, indicating increased prepayments or timing shifts in expenses. Accrued litigation and legal settlements showed a large write-off in 2019 followed by a steady decline, turning positive in 2022, which may reflect resolution of prior contingencies.
- Changes in Operating Assets and Liabilities
- The net changes in operating assets and liabilities were negative throughout the period, though the magnitude decreased after 2019, indicating more stable working capital management. Adjustments to reconcile net income to net cash provided by operations increased substantially in 2022, supporting improved cash flow conversion despite fluctuations in net income.
- Operating Cash Flow
- Net cash provided by operating activities consistently grew over the period, reflecting strengthened core business performance and cash generation capability, rising from $6.2 billion in 2018 to $11.2 billion in 2022.
- Investing Activities
- Investment in securities and fixed assets was generally consistent, with purchases exceeding proceeds in available-for-sale and held-to-maturity securities. Capitalized software expenditures increased significantly in 2022, reaching $655 million, signaling intensified investment in technology. Acquisition activity was particularly high in 2019 and 2021, with acquisitions net of cash acquired amounting to $1.44 billion and $4.44 billion respectively, followed by a smaller acquisition in 2022. Net cash used in investing activities peaked dramatically in 2021 due to these acquisitions but decreased noticeably in 2022.
- Financing Activities
- Purchases of treasury stock increased sharply in 2022 to $8.75 billion, indicating an aggressive share repurchase program. Dividends paid rose steadily, consistent with growth in earnings. Proceeds from debt were highest in 2020 but trended downward thereafter, while debt repayments were irregular but increased in 2021 and 2022. Overall, net cash used in financing activities grew over time, peaking in 2022, reflecting significant capital returns to shareholders and debt management activities.
- Liquidity and Cash Position
- Cash and equivalents rose steadily through 2020, peaking at over $12.4 billion before declining in 2021 and 2022 to $9.2 billion. The net increase in cash was positive in the first three years but negative in the last two, driven largely by increased financing outflows and investment in acquisitions and capital expenditures.
- Summary of Financial Health and Operational Efficiency
- The data portrays a company with strong profitability growth following a pandemic-related dip, robust cash flow generation, and significant capital allocation toward acquisitions and shareholder returns. Increased amortization and intangible asset investment reflect strategic business expansion. Working capital exhibited moderate volatility but generally moved towards stabilization. Overall, the financial trends reveal effective operational management and an emphasis on deploying capital in ways that support long-term growth and shareholder value enhancement.