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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Mastercard Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	9,638)	9,129)	6,937)	8,254)	5,750)
Cost of capital²	13.80%	13.73%	13.71%	13.89%	13.87%
Invested capital³	21,548)	22,365)	19,854)	14,672)	11,243)

Economic profit⁴	6,665)	6,059)	4,215)	6,215)	4,191)

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).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 9,638 – 13.80% × 21,548 = 6,665

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Mastercard Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Mastercard Inc., NOPAT calculation

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)
Deferred income tax expense (benefit)¹	(651)	(70)	73)	(7)	(244)
Increase (decrease) in deferred revenue²	20)	164)	154)	25)	72)
Increase (decrease) in equity equivalents³	(631)	94)	227)	18)	(172)
Interest expense	471)	431)	380)	224)	186)
Interest expense, operating lease liability⁴	19)	20)	23)	22)	16)
Adjusted interest expense	490)	451)	403)	246)	202)
Tax benefit of interest expense⁵	(103)	(95)	(85)	(52)	(42)
Adjusted interest expense, after taxes⁶	387)	356)	318)	194)	160)
(Gain) loss on marketable securities	(61)	(11)	(24)	(97)	(122)
Investment income, before taxes	(61)	(11)	(24)	(97)	(122)
Tax expense (benefit) of investment income⁷	13)	2)	5)	20)	26)
Investment income, after taxes⁸	(48)	(9)	(19)	(77)	(96)
Net operating profit after taxes (NOPAT)	9,638)	9,129)	6,937)	8,254)	5,750)

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).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net income.

⁴ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 770 × 2.50% = 19

⁵ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 490 × 21.00% = 103

⁶ Addition of after taxes interest expense to net income.

⁷ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 61 × 21.00% = 13

⁸ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Mastercard Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Mastercard Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Income tax expense	1,802)	1,620)	1,349)	1,613)	1,345)
Less: Deferred income tax expense (benefit)	(651)	(70)	73)	(7)	(244)
Add: Tax savings from interest expense	103)	95)	85)	52)	42)
Less: Tax imposed on investment income	13)	2)	5)	20)	26)
Cash operating taxes	2,543)	1,782)	1,356)	1,651)	1,606)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Mastercard Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

Mastercard Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Short-term debt	274)	792)	649)	—)	500)
Long-term debt, excluding current portion	13,749)	13,109)	12,023)	8,527)	5,834)
Operating lease liability¹	770)	772)	851)	762)	582)
Total reported debt & leases	14,793)	14,673)	13,523)	9,289)	6,916)
Total Mastercard Incorporated stockholders’ equity	6,298)	7,312)	6,391)	5,893)	5,395)
Net deferred tax (assets) liabilities²	(758)	(91)	(405)	(458)	(503)
Deferred revenue³	682)	662)	498)	344)	319)
Equity equivalents⁴	(76)	571)	93)	(114)	(184)
Accumulated other comprehensive (income) loss, net of tax⁵	1,253)	809)	680)	673)	718)
Redeemable non-controlling interests	21)	29)	29)	74)	71)
Non-controlling interests	58)	71)	97)	24)	23)
Adjusted total Mastercard Incorporated stockholders’ equity	7,554)	8,792)	7,290)	6,550)	6,023)
Marketable securities⁶	(799)	(1,100)	(959)	(1,167)	(1,696)
Invested capital	21,548)	22,365)	19,854)	14,672)	11,243)

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).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of deferred revenue.

⁴ Addition of equity equivalents to total Mastercard Incorporated stockholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Mastercard Inc. invested capital increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Mastercard Inc., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	352,662)	352,662)	÷	366,132)	=	0.96	0.96	×	14.23%	=	13.71%
Long-term debt, including the current portion³	12,700)	12,700)	÷	366,132)	=	0.03	0.03	×	3.17% × (1 – 21.00%)	=	0.09%
Operating lease liability⁴	770)	770)	÷	366,132)	=	0.00	0.00	×	2.50% × (1 – 21.00%)	=	0.00%
Total:	366,132)					1.00					13.80%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including the current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	361,441)	361,441)	÷	377,513)	=	0.96	0.96	×	14.23%	=	13.63%
Long-term debt, including the current portion³	15,300)	15,300)	÷	377,513)	=	0.04	0.04	×	3.06% × (1 – 21.00%)	=	0.10%
Operating lease liability⁴	772)	772)	÷	377,513)	=	0.00	0.00	×	2.60% × (1 – 21.00%)	=	0.00%
Total:	377,513)					1.00					13.73%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including the current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	338,737)	338,737)	÷	354,388)	=	0.96	0.96	×	14.23%	=	13.60%
Long-term debt, including the current portion³	14,800)	14,800)	÷	354,388)	=	0.04	0.04	×	3.12% × (1 – 21.00%)	=	0.10%
Operating lease liability⁴	851)	851)	÷	354,388)	=	0.00	0.00	×	2.70% × (1 – 21.00%)	=	0.01%
Total:	354,388)					1.00					13.71%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including the current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	342,692)	342,692)	÷	352,654)	=	0.97	0.97	×	14.23%	=	13.83%
Long-term debt, including the current portion³	9,200)	9,200)	÷	352,654)	=	0.03	0.03	×	2.91% × (1 – 21.00%)	=	0.06%
Operating lease liability⁴	762)	762)	÷	352,654)	=	0.00	0.00	×	2.90% × (1 – 21.00%)	=	0.00%
Total:	352,654)					1.00					13.89%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including the current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	226,254)	226,254)	÷	233,336)	=	0.97	0.97	×	14.23%	=	13.80%
Long-term debt, including the current portion³	6,500)	6,500)	÷	233,336)	=	0.03	0.03	×	2.80% × (1 – 21.00%)	=	0.06%
Operating lease liability⁴	582)	582)	÷	233,336)	=	0.00	0.00	×	2.80% × (1 – 21.00%)	=	0.01%
Total:	233,336)					1.00					13.87%

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

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including the current portion. See details »

⁴ Operating lease liability. See details »

Mastercard Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	6,665)	6,059)	4,215)	6,215)	4,191)
Invested capital²	21,548)	22,365)	19,854)	14,672)	11,243)
Performance Ratio
Economic spread ratio³	30.93%	27.09%	21.23%	42.36%	37.28%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	8.92%	10.76%	11.33%	10.05%	10.29%
Adobe Inc.	11.08%	13.50%	5.77%	3.87%	1.52%
International Business Machines Corp.	-9.29%	-4.30%	-4.04%	-0.31%	—
Intuit Inc.	-4.93%	2.82%	6.15%	19.82%	17.52%
Microsoft Corp.	24.05%	33.06%	31.08%	26.19%	7.85%
Oracle Corp.	-0.81%	7.24%	1.55%	4.26%	-4.73%
Palo Alto Networks Inc.	6.83%	-1.86%	-2.90%	0.35%	-2.47%
Salesforce Inc.	-9.48%	-7.17%	-10.21%	-6.20%	—
ServiceNow Inc.	4.51%	5.72%	7.34%	6.75%	—
Synopsys Inc.	3.07%	-2.95%	-2.77%	-5.77%	-7.15%

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).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 6,665 ÷ 21,548 = 30.93%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Mastercard Inc. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

Mastercard Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	6,665)	6,059)	4,215)	6,215)	4,191)

Net revenue	22,237)	18,884)	15,301)	16,883)	14,950)
Add: Increase (decrease) in deferred revenue	20)	164)	154)	25)	72)
Adjusted net revenue	22,257)	19,048)	15,455)	16,908)	15,022)
Performance Ratio
Economic profit margin²	29.94%	31.81%	27.27%	36.76%	27.90%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	4.30%	5.52%	5.76%	4.65%	4.32%
Adobe Inc.	12.91%	16.82%	8.28%	5.82%	2.49%
International Business Machines Corp.	-16.13%	-8.20%	-7.02%	-0.53%	—
Intuit Inc.	-9.49%	3.58%	6.93%	13.21%	11.64%
Microsoft Corp.	23.05%	27.44%	23.07%	19.38%	5.57%
Oracle Corp.	-1.49%	14.32%	3.53%	7.77%	-8.55%
Palo Alto Networks Inc.	7.95%	-2.50%	-4.70%	0.39%	-3.66%
Salesforce Inc.	-26.33%	-16.43%	-25.12%	-12.20%	—
ServiceNow Inc.	3.62%	4.94%	5.98%	4.94%	—
Synopsys Inc.	4.33%	-4.69%	-4.77%	-9.97%	-12.20%

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).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × 6,665 ÷ 22,257 = 29.94%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Mastercard Inc. economic profit margin improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022.

Mastercard Inc. (NYSE:MA)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin