Mastercard Inc. (NYSE:MA)

The analysis of the financial ratios over the five-year period reveals several notable trends and shifts in the company’s financial performance and position.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios declined from 0.6 in 2018 to a low of approximately 0.46-0.47 in 2020. Subsequently, they improved steadily, reaching around 0.57-0.59 by 2022. This pattern suggests a temporary reduction in asset utilization efficiency during 2020, likely associated with external factors affecting asset productivity, with a recovery phase thereafter.

Current Ratio

The reported current ratio increased from 1.39 in 2018 to a peak of 1.61 in 2020, indicating strengthening short-term liquidity, but then declined steadily to 1.17 by 2022. Adjusted values mirror this trend. The declining current ratio post-2020 suggests a reduction in current asset coverage relative to current liabilities, which may imply tightening liquidity management or changes in working capital structure in recent years.

Debt to Equity Ratio

There has been a consistent increase in both reported and adjusted debt to equity ratios from 1.17 and 1.3 in 2018 to 2.23 and 2.35 respectively by 2022. This upward trend indicates a growing reliance on debt financing relative to shareholders’ equity, reflecting a more leveraged capital structure over time.

Debt to Capital Ratio

A similar increasing pattern is observed in the debt to capital ratio, rising from approximately 0.54-0.57 in 2018 to around 0.69-0.70 in 2022. This corroborates the higher leverage indicated by the debt to equity ratio and signals an increasing proportion of debt in the company’s overall capital base.

Financial Leverage

Financial leverage ratios show a gradual increase from roughly 4.6-4.7 in 2018 to over 6.0 in the reported figure by 2022 and nearly 6.0 adjusted as well. This increased leverage implies that the company is using more borrowed funds relative to equity, which can enhance returns but also increases financial risk.

Net Profit Margin

Reported net profit margin values exhibited variability, rising sharply from 39.19% in 2018 to 48.08% in 2019, then declining to approximately 41.9% in 2020 before climbing again to about 46% in 2021 and slightly falling to 44.66% in 2022. Adjusted margins follow a comparable pattern. The fluctuations suggest some impact on profitability margins, possibly from operational challenges or changing cost structures during the period.

Return on Equity (ROE)

The reported ROE increased notably from 108.6% in 2018 to a peak of 157.67% in 2022, albeit with a dip around 2020. Adjusted ROE mirrors this trend but presents a lesser peak value. The high and increasing ROE reflects strong profitability relative to equity, likely enhanced by increased financial leverage over the years.

Return on Assets (ROA)

Return on assets declined significantly from around 23.57% in 2018 to a low near 19.1%-20% in 2020, followed by recovery to 23-25% in the subsequent years. This indicates that asset profitability was compressed in 2020 but improved thereafter, consistent with observed trends in asset turnover and profit margins.

Overall, the data suggests a period of temporarily reduced asset efficiency and profitability around 2020, with subsequent recovery. Simultaneously, the company progressively increased its financial leverage and debt levels, which appears to have amplified equity returns. Liquidity ratios indicate a peak in short-term liquidity in 2020 followed by a reduction, suggesting changing liquidity management strategies. Profitability remains strong, supported by high net profit margins and exceptional ROE, albeit with some volatility during the period analyzed.

Net Revenue

Net revenue exhibited a generally upward trend over the observed period, rising from $14,950 million in 2018 to $22,237 million in 2022. A notable dip occurred in 2020, with revenue declining to $15,301 million from $16,883 million in 2019, followed by a recovery and growth in subsequent years.

Total Assets

Total assets increased steadily from $24,860 million in 2018 to $38,724 million in 2022. The growth was consistent across the years, with no reversing trends, indicating ongoing asset accumulation or investment.

Reported Total Asset Turnover

The reported total asset turnover ratio declined from 0.6 in 2018 to 0.58 in 2019 and further dropped to 0.46 in 2020. This was followed by a gradual improvement to 0.5 in 2021 and 0.57 in 2022, suggesting a recovery in the efficiency of asset utilization for generating revenue after a low point in 2020.

Adjusted Net Revenue

Adjusted net revenue mirrored the trend of net revenue, increasing from $15,022 million in 2018 to $22,257 million in 2022. Similarly, a decline was observed in 2020, followed by consistent growth thereafter.

Adjusted Total Assets

Adjusted total assets showed steady growth, increasing from $24,872 million in 2018 to $37,573 million in 2022. The trend was stable and positive throughout the period.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio followed a pattern close to the reported ratio. It declined from 0.6 in 2018 to 0.59 in 2019 and experienced a more significant drop to 0.47 in 2020. This ratio then improved steadily to 0.51 in 2021 and 0.59 in 2022, indicating improved asset efficiency after the 2020 low.

The data reveals several notable trends in liquidity and working capital management over the five-year period. Current assets showed an overall increase from 2018 through 2020, rising from 16,171 million to a peak of 19,113 million. However, this upward trend reversed starting in 2021, with current assets declining to 16,949 million and further to 16,606 million in 2022, indicating a contraction in liquid and short-term resources.

In contrast, current liabilities experienced a steady upward trajectory throughout the period. Beginning at 11,593 million in 2018, they increased annually to reach 14,171 million by the end of 2022. This rise in short-term obligations outpaced the growth in current assets, especially noticeable in the final two years, which may suggest growing pressure on the company's liquidity position.

The reported current ratio, which measures the ability to cover current liabilities with current assets, reflects these dynamics. The ratio improved from 1.39 in 2018 to a high of 1.61 in 2020, corresponding with the peak in current assets. Afterwards, the ratio decreased consistently to 1.29 in 2021 and further to 1.17 in 2022, signifying a weakening liquidity buffer.

When considering the adjusted figures for current liabilities, the pattern remains consistent. Adjusted current liabilities followed a steady increase from 11,375 million in 2018 to 13,737 million in 2022. Correspondingly, the adjusted current ratio shows a similar rise and fall, peaking at 1.66 in 2020 before declining to 1.21 in 2022. The adjusted ratios are marginally higher than the reported ratios in each year, suggesting slight adjustments to the definition of liabilities provide a somewhat stronger liquidity position.

Overall, the data indicates that while liquidity improved in the initial years, reaching optimal levels around 2020, the subsequent decline in current assets coupled with rising current liabilities has resulted in diminishing short-term financial flexibility. This trend may warrant further analysis regarding the company’s working capital management and its ability to meet obligations promptly under evolving market conditions.

Total Debt

The total debt exhibits a consistent upward trend from 2018 through 2022, rising from $6,334 million to $14,023 million. The most significant increases occurred from 2018 to 2020, with growth slowing somewhat in the subsequent years but continuing to increase overall.

Total Stockholders’ Equity

Stockholders' equity increased steadily from 2018 to 2021, growing from $5,395 million to $7,312 million. However, in 2022 it experienced a decline to $6,298 million, interrupting the prior growth trend.

Reported Debt to Equity Ratio

The reported debt to equity ratio increased notably over the five-year period, moving from 1.17 in 2018 to 2.23 in 2022. This indicates that the company has taken on substantially more debt relative to equity, with a peak rise between 2019 and 2020.

Adjusted Total Debt

The adjusted total debt follows a similar pattern to the reported total debt, rising steadily each year from $6,916 million in 2018 to $14,793 million in 2022. The adjusted figures are consistently higher than the reported values, reflecting additional considerations in the adjusted calculations.

Adjusted Total Equity

Adjusted total equity trends upwards from 2018 to 2021, increasing from $5,305 million to $7,983 million before decreasing sharply to $6,301 million in 2022. This pattern mirrors that of reported stockholders' equity but with slightly different magnitude.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio increased from 1.30 in 2018 to 2.35 in 2022, showing that adjusted debt levels have increased at a faster pace relative to adjusted equity. The ratio peaked in 2020 at 2.05, then declined slightly in 2021 before rising again in 2022 to its highest point.

Overall Analysis

The financial data indicates a strategic shift towards higher leverage over the five-year period, with total debt rising significantly and equity growth stalling and reversing in the final year. The increasing debt to equity ratios suggest a growing reliance on debt financing. The stability in equity through 2021, followed by decline in 2022, may warrant further investigation to understand underlying causes. The consistent increase in adjusted debt levels relative to equity also highlights an elevated risk profile in terms of capital structure.

Total Debt

The total debt shows a consistent upward trajectory across the analyzed periods. Starting at 6,334 million USD in 2018, the debt increased substantially, reaching 14,023 million USD by the end of 2022. The most significant rise occurred between 2018 and 2020, with the rate of increase tapering somewhat in the subsequent years, although the overall level of debt still expanded.

Total Capital

Total capital experienced growth from 11,729 million USD in 2018 to a peak of 21,213 million USD in 2021. However, there was a noticeable decline in 2022, reducing to 20,321 million USD. This suggests a period of capital accumulation followed by a slight contraction or rebalancing in the last reported year.

Reported Debt to Capital Ratio

The reported debt to capital ratio reflects the relationship between the debt and the capital base, starting at 0.54 in 2018 and rising steadily to 0.69 by 2022. The ratio increased notably from 2018 to 2020, stabilizing at 0.66 for two years before increasing again in 2022. This indicates a gradual increase in leverage over the period, with debt growing faster than capital.

Adjusted Total Debt

Adjusted total debt follows a similar upward trend as total debt, beginning at 6,916 million USD in 2018 and rising to 14,793 million USD in 2022. The increase was steadier across the years, with adjustments accounting for a slightly higher level of debt compared to the unadjusted figures.

Adjusted Total Capital

Adjusted total capital grew from 12,221 million USD in 2018 to a peak of 22,656 million USD in 2021, followed by a decrease to 21,094 million USD in 2022. This trend parallels the behavior of total capital, indicating that adjustments did not markedly alter the overall trajectory but slightly elevated the capital values reported.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio started at 0.57 in 2018, increasing to a high of 0.67 in 2020, then slightly decreasing to 0.65 in 2021, before rising again to 0.70 in 2022. This ratio generally indicates that the company's leverage has grown, with some minor fluctuations but an overall trend towards higher leverage over the five-year period.

Total Assets

Total assets showed a consistent upward trend from 2018 through 2022, increasing from $24,860 million in 2018 to $38,724 million in 2022. This growth reflects a steady expansion over the five-year period, though the rate of increase slightly moderated between 2021 and 2022.

Total Stockholders’ Equity

Total stockholders’ equity increased steadily from $5,395 million in 2018 to a peak of $7,312 million in 2021. However, in 2022, the equity decreased to $6,298 million, indicating a reversal in the prior growth trend and suggesting potential shareholder value challenges or increased distributions.

Reported Financial Leverage

The reported financial leverage ratio trended upward overall, starting at 4.61 in 2018 and rising to 6.15 by the end of 2022. Notably, there was a slight dip between 2020 and 2021, where the ratio decreased from 5.25 to 5.15 before increasing sharply the following year. This indicates a growing reliance on debt or other liabilities relative to equity in the capital structure.

Adjusted Total Assets

Adjusted total assets closely mirrored the pattern of total assets, increasing from $24,872 million in 2018 to $37,573 million in 2022. Growth was generally steady, confirming consistent asset base expansion with minor fluctuations in growth rate.

Adjusted Total Equity

Adjusted total equity increased from $5,305 million in 2018 to its peak of $7,983 million in 2021, after which it decreased to $6,301 million in 2022. This movement parallels the trend observed in the reported total equity and suggests similar underlying factors affecting both reported and adjusted equity figures.

Adjusted Financial Leverage

The adjusted financial leverage ratio increased from 4.69 in 2018 to 5.96 in 2022, with a notable decline in 2021 from 5.01 to 4.66 before resuming its upward trajectory. This pattern highlights a temporary strengthening of equity relative to adjusted assets in 2021, followed by increased leverage in 2022.

The financial data reflects a variable but generally positive performance trend across the reported periods.

Net income

There is a noticeable increase from 2018 to 2019, rising sharply from 5,859 million US dollars to 8,118 million US dollars. This is followed by a decline in 2020 down to 6,411 million US dollars, likely impacted by external factors during that period. Subsequently, net income recovers significantly in 2021 and 2022, reaching 8,687 million US dollars and 9,930 million US dollars respectively, demonstrating strong recovery and growth.

Net revenue

Net revenue shows a generally upward trend, increasing from 14,950 million US dollars in 2018 to 16,883 million US dollars in 2019, marking steady growth. It declines slightly in 2020 to 15,301 million US dollars but then rises consistently through 2021 and 2022, reaching 18,884 million US dollars and 22,237 million US dollars respectively, indicating robust expansion in revenue generation beyond the 2020 dip.

Reported net profit margin

The reported net profit margin mirrors fluctuations in income and revenue, starting at 39.19% in 2018 and increasing to a peak of 48.08% in 2019. It declines in 2020 to 41.9%, then improves again to 46% in 2021. In 2022, the margin slightly decreases to 44.66%, nonetheless remaining at a high level compared to earlier years, signifying effective cost management and profitability despite some variability.

Adjusted net income

The adjusted net income trend closely follows the net income pattern but at slightly lower levels in most years. It increases from 5,466 million US dollars in 2018 to a peak of 8,181 million US dollars in 2019, dips to 6,631 million US dollars in 2020, and recovers to 8,652 million US dollars in 2021. The 2022 figure shows a more modest increase to 8,855 million US dollars, indicating some adjustments that temper reported profits but still suggest profitability growth.

Adjusted net revenue

The adjusted net revenue exhibits a similar trajectory as the unadjusted net revenue, with steady growth overall. It rises from 15,022 million US dollars in 2018 to 16,908 million US dollars in 2019, decreases slightly to 15,455 million US dollars in 2020, then increases again in 2021 and 2022, finishing at 22,257 million US dollars, confirming consistent upward momentum in revenue after adjusting for certain items.

Adjusted net profit margin

This margin starts at 36.39% in 2018, peaks noticeably at 48.39% in 2019, then declines to 42.91% in 2020. It improves to 45.42% in 2021, though it decreases to 39.79% in 2022, representing the most pronounced drop in profitability ratio among the margins. This suggests that adjustments have impacted the margin more significantly in 2022, potentially reflecting rising costs or changes in accounting adjustments affecting profits.

Overall, the financial data reveals a strong recovery after a downturn in 2020, with revenue and income rising robustly through 2021 and 2022. Profit margins experienced some volatility but generally remained at healthy levels. The divergence between reported and adjusted figures in 2022's profit margin warrants further analysis to understand underlying factors influencing profitability adjustments during that period.

Net Income

Net income showed a general upward trend from 2018 to 2022, increasing from $5,859 million in 2018 to $9,930 million in 2022. Despite a decline in 2020 to $6,411 million, likely reflecting external economic challenges, net income rebounded strongly in subsequent years, reaching its highest point in 2022.

Total Stockholders’ Equity

Total stockholders’ equity grew steadily from $5,395 million in 2018 to a peak of $7,312 million in 2021, after which it dropped to $6,298 million in 2022. The decline in 2022 suggests some changes in capital structure, payouts, or valuation adjustments that reduced equity despite rising income levels.

Reported Return on Equity (ROE)

Reported ROE experienced considerable fluctuations but remained notably high throughout the period. Starting at 108.6% in 2018, it peaked at 157.67% in 2022, indicating an exceptionally strong return relative to equity, especially in the last reported year. The dip in 2020 to 100.31% aligns with the net income decrease observed that year.

Adjusted Net Income

Adjusted net income followed a similar trajectory to reported net income, rising from $5,466 million in 2018 to $8,855 million in 2022. It mirrored the dip in 2020 seen in reported figures but showed steady growth thereafter. The adjustment factors appear to slightly smooth the variations but do not alter the general trend.

Adjusted Total Equity

Adjusted total equity rose from $5,305 million in 2018 to $7,983 million in 2021 before falling to $6,301 million in 2022. This pattern closely follows the trend in total stockholders’ equity, confirming a peak in 2021 and a significant contraction in the ensuing year on an adjusted basis as well.

Adjusted Return on Equity (ROE)

Adjusted ROE fluctuated significantly, starting at 103.03% in 2018, peaking at 139.2% in 2019, then decreasing to 100.32% in 2020, and gradually climbing to 140.53% in 2022. This metric confirms strong profitability relative to equity, with some volatility linked to income and equity changes, but consistently remaining above 100% except in 2020.

Overall Trends and Insights

The financial data indicates sustained high profitability and efficient equity utilization across the period despite a notable dip in 2020, which likely reflects external economic disruptions. The rebound in income and ROE measures from 2021 onwards suggests strong recovery and growth. The reduction in equity figures in 2022 contrasts with increasing income, resulting in exceptionally high ROE values, which may warrant further investigation into equity management and capital allocation strategies.

Net Income

Net income demonstrated an overall upward trend from 5,859 million USD in 2018 to 9,930 million USD in 2022. Despite a dip in 2020 to 6,411 million USD, the figures rebounded strongly in subsequent years, peaking at 8,687 million USD in 2021 and increasing further to 9,930 million USD in 2022.

Total Assets

Total assets consistently increased over the five-year period, growing from 24,860 million USD in 2018 to 38,724 million USD in 2022. The asset base expanded steadily each year, reflecting ongoing growth and accumulation of resources.

Reported Return on Assets (ROA)

The reported ROA exhibited some fluctuation during the period. Starting at 23.57% in 2018, it rose to a peak of 27.77% in 2019 before declining to 19.09% in 2020. The ratio recovered thereafter to 23.06% in 2021 and further increased to 25.64% in 2022, indicating restored efficiency in asset utilization.

Adjusted Net Income

Adjusted net income followed a similar pattern to reported net income, increasing from 5,466 million USD in 2018 to 8,855 million USD in 2022. After peaking in 2019 at 8,181 million USD, there was a decrease in 2020 to 6,631 million USD, followed by a recovery through 2021 and stabilization close to 2022 levels.

Adjusted Total Assets

Adjusted total assets showed consistent growth, moving from 24,872 million USD in 2018 to 37,573 million USD in 2022. This consistent increase aligns closely with the pattern observed in total assets, reflecting steady asset growth even after adjustments.

Adjusted Return on Assets (ROA)

The adjusted ROA mirrored the trends observed in the reported ROA. Starting at 21.98% in 2018, it increased to 28.51% in 2019, dipped to 20.04% in 2020, and then improved to 23.27% in 2021. In 2022, it was slightly lower at 23.57% but remained relatively stable compared to the prior year, indicating consistent asset performance after adjustments.