Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Mastercard Inc., solvency ratios
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).
The solvency profile of Mastercard Inc. from 2018 to 2022 indicates a systematic increase in financial leverage and a shift in the capital structure toward higher debt utilization.
- Leverage Ratios
- A consistent upward trajectory is observed in the debt to equity ratio, which rose from 1.17 in 2018 to 2.23 in 2022. When operating lease liabilities are included, this ratio reached 2.35 by the end of the period. The debt to capital ratio mirrors this trend, increasing from 0.54 to 0.69, which suggests that debt has become a more prominent component of the total capital base over the five-year span.
- Asset and Financial Leverage
- The debt to assets ratio peaked in 2020 at 0.38, followed by a period of relative stabilization through 2022. Financial leverage demonstrates a general increase, moving from 4.61 in 2018 to 6.15 in 2022, with a more pronounced acceleration occurring between 2021 and 2022.
- Coverage Ratios
- A significant contraction in coverage capacity occurred in 2020. Interest coverage dropped from a peak of 44.44 in 2019 to 21.42 in 2020, while fixed charge coverage fell from 31.13 to 16.43 during the same period. While a modest recovery is evident through 2022, with interest coverage rising to 25.91, these figures remain substantially lower than pre-2020 levels, indicating a decreased margin of safety for meeting fixed financial obligations compared to the start of the period.
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Debt to Equity
Mastercard Inc., debt to equity 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) | ||||||
| Short-term debt | 274) | 792) | 649) | —) | 500) | |
| Long-term debt, excluding current portion | 13,749) | 13,109) | 12,023) | 8,527) | 5,834) | |
| Total debt | 14,023) | 13,901) | 12,672) | 8,527) | 6,334) | |
| Total Mastercard Incorporated stockholders’ equity | 6,298) | 7,312) | 6,391) | 5,893) | 5,395) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 2.23 | 1.90 | 1.98 | 1.45 | 1.17 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Accenture PLC | 0.00 | 0.00 | — | — | — | |
| Adobe Inc. | 0.29 | 0.28 | 0.31 | — | — | |
| AppLovin Corp. | 1.72 | 1.53 | — | — | — | |
| Cadence Design Systems Inc. | 0.27 | 0.13 | — | — | — | |
| Datadog Inc. | 0.52 | 0.71 | — | — | — | |
| International Business Machines Corp. | 2.32 | 2.74 | — | — | — | |
| Intuit Inc. | 0.42 | 0.21 | — | — | — | |
| Microsoft Corp. | 0.39 | 0.50 | — | — | — | |
| Oracle Corp. | — | 16.08 | — | — | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | — | — | — | |
| Palo Alto Networks Inc. | 17.51 | 5.08 | — | — | — | |
| Salesforce Inc. | 0.19 | 0.07 | — | — | — | |
| ServiceNow Inc. | 0.30 | 0.43 | — | — | — | |
| Synopsys Inc. | 0.00 | 0.02 | 0.03 | — | — | |
| Workday Inc. | 0.41 | 0.55 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Software & Services | 0.71 | 0.83 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Information Technology | 0.70 | 0.83 | — | — | — | |
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 2022 Calculation
Debt to equity = Total debt ÷ Total Mastercard Incorporated stockholders’ equity
= 14,023 ÷ 6,298 = 2.23
2 Click competitor name to see calculations.
A consistent increase in financial leverage is observed between 2018 and 2022, characterized by a significant expansion of total debt relative to stockholders' equity.
- Total Debt Evolution
- Total debt experienced a continuous upward trajectory, rising from US$ 6,334 million in 2018 to US$ 14,023 million by the end of 2022. The most pronounced acceleration occurred between 2019 and 2020, where debt levels increased by approximately 48.5% within a single fiscal year.
- Stockholders' Equity Trends
- Equity demonstrated steady growth from 2018 through 2021, peaking at US$ 7,312 million. However, a contraction is noted in 2022, with equity decreasing to US$ 6,298 million, effectively returning to levels similar to those observed in 2020.
- Debt to Equity Ratio Analysis
- The debt to equity ratio shifted from 1.17 in 2018 to 2.23 in 2022. Although a marginal decrease was recorded in 2021, moving from 1.98 to 1.90, the overall trend indicates a heightened reliance on borrowed capital. The peak ratio in 2022 is the result of the concurrent increase in total liabilities and the reduction in total equity.
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Debt to Equity (including Operating Lease Liability)
Mastercard Inc., debt to equity (including operating lease liability) 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) | ||||||
| Short-term debt | 274) | 792) | 649) | —) | 500) | |
| Long-term debt, excluding current portion | 13,749) | 13,109) | 12,023) | 8,527) | 5,834) | |
| Total debt | 14,023) | 13,901) | 12,672) | 8,527) | 6,334) | |
| Operating lease liabilities (recorded on Other current liabilities) | 140) | 127) | 125) | 106) | —) | |
| Operating lease liabilities (recorded on Other liabilities) | 630) | 645) | 726) | 656) | —) | |
| Total debt (including operating lease liability) | 14,793) | 14,673) | 13,523) | 9,289) | 6,334) | |
| Total Mastercard Incorporated stockholders’ equity | 6,298) | 7,312) | 6,391) | 5,893) | 5,395) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 2.35 | 2.01 | 2.12 | 1.58 | 1.17 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.15 | 0.18 | — | — | — | |
| Adobe Inc. | 0.33 | 0.32 | 0.35 | — | — | |
| AppLovin Corp. | 1.76 | 1.57 | — | — | — | |
| Cadence Design Systems Inc. | 0.34 | 0.18 | — | — | — | |
| Datadog Inc. | 0.59 | 0.78 | — | — | — | |
| International Business Machines Corp. | 2.46 | 2.92 | — | — | — | |
| Intuit Inc. | 0.46 | 0.25 | — | — | — | |
| Microsoft Corp. | 0.47 | 0.58 | — | — | — | |
| Oracle Corp. | — | 16.61 | — | — | — | |
| Palantir Technologies Inc. | 0.10 | 0.11 | — | — | — | |
| Palo Alto Networks Inc. | 19.12 | 5.68 | — | — | — | |
| Salesforce Inc. | 0.25 | 0.15 | — | — | — | |
| ServiceNow Inc. | 0.44 | 0.60 | — | — | — | |
| Synopsys Inc. | 0.12 | 0.13 | 0.14 | — | — | |
| Workday Inc. | 0.46 | 0.68 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.81 | 0.93 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.76 | 0.90 | — | — | — | |
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 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Mastercard Incorporated stockholders’ equity
= 14,793 ÷ 6,298 = 2.35
2 Click competitor name to see calculations.
The solvency profile between 2018 and 2022 reflects a significant increase in financial leverage, characterized by a steady rise in total debt relative to stockholders' equity.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trajectory, increasing from 6,334 million US$ in 2018 to 14,793 million US$ in 2022. The most pronounced acceleration occurred between 2019 and 2020, during which liabilities grew by approximately 4,234 million US$.
- Stockholders' Equity Evolution
- Equity demonstrated a general growth trend from 2018 through 2021, rising from 5,395 million US$ to a peak of 7,312 million US$. However, this trend reversed in 2022, with equity decreasing to 6,298 million US$, contributing to a higher leverage position.
- Debt to Equity Ratio Analysis
- The debt to equity ratio increased from 1.17 in 2018 to 2.35 in 2022. Although a marginal decline to 2.01 was observed in 2021, the ratio reached its five-year high in 2022. This progression indicates that the company's growth in debt has significantly outpaced the growth of its equity base over the observed period.
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Debt to Capital
Mastercard Inc., debt to capital 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) | ||||||
| Short-term debt | 274) | 792) | 649) | —) | 500) | |
| Long-term debt, excluding current portion | 13,749) | 13,109) | 12,023) | 8,527) | 5,834) | |
| Total debt | 14,023) | 13,901) | 12,672) | 8,527) | 6,334) | |
| Total Mastercard Incorporated stockholders’ equity | 6,298) | 7,312) | 6,391) | 5,893) | 5,395) | |
| Total capital | 20,321) | 21,213) | 19,063) | 14,420) | 11,729) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.69 | 0.66 | 0.66 | 0.59 | 0.54 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Accenture PLC | 0.00 | 0.00 | — | — | — | |
| Adobe Inc. | 0.23 | 0.22 | 0.24 | — | — | |
| AppLovin Corp. | 0.63 | 0.60 | — | — | — | |
| Cadence Design Systems Inc. | 0.21 | 0.11 | — | — | — | |
| Datadog Inc. | 0.34 | 0.41 | — | — | — | |
| International Business Machines Corp. | 0.70 | 0.73 | — | — | — | |
| Intuit Inc. | 0.30 | 0.17 | — | — | — | |
| Microsoft Corp. | 0.28 | 0.33 | — | — | — | |
| Oracle Corp. | 1.09 | 0.94 | — | — | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | — | — | — | |
| Palo Alto Networks Inc. | 0.95 | 0.84 | — | — | — | |
| Salesforce Inc. | 0.16 | 0.06 | — | — | — | |
| ServiceNow Inc. | 0.23 | 0.30 | — | — | — | |
| Synopsys Inc. | 0.00 | 0.02 | 0.03 | — | — | |
| Workday Inc. | 0.29 | 0.35 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Software & Services | 0.42 | 0.45 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Information Technology | 0.41 | 0.45 | — | — | — | |
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 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 14,023 ÷ 20,321 = 0.69
2 Click competitor name to see calculations.
An analysis of solvency indicators from 2018 to 2022 reveals a progressive increase in financial leverage. The period is characterized by a substantial expansion of total debt and a corresponding rise in the debt-to-capital ratio, indicating a shift toward a more debt-intensive capital structure.
- Total Debt Trends
- Total debt experienced continuous growth, rising from US$ 6,334 million in 2018 to US$ 14,023 million by the end of 2022. A significant acceleration in borrowing is observed between 2019 and 2020, where debt increased by approximately 48.6% within a single fiscal year, followed by a period of more moderate growth through 2022.
- Total Capital Evolution
- Total capital followed an upward trajectory for most of the period, increasing from US$ 11,729 million in 2018 to a peak of US$ 21,213 million in 2021. A slight contraction occurred in 2022, with total capital decreasing to US$ 20,321 million, while total debt continued to rise marginally.
- Debt to Capital Ratio Analysis
- The debt to capital ratio demonstrates a steady upward trend, moving from 0.54 in 2018 to 0.69 in 2022. After reaching 0.66 in 2020 and maintaining that level through 2021, the ratio climbed to its peak in 2022. This pattern indicates that debt has grown at a faster rate than the overall capital base, resulting in an increased reliance on borrowed funds to finance the organization's operations and growth.
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Debt to Capital (including Operating Lease Liability)
Mastercard Inc., debt to capital (including operating lease liability) 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) | ||||||
| Short-term debt | 274) | 792) | 649) | —) | 500) | |
| Long-term debt, excluding current portion | 13,749) | 13,109) | 12,023) | 8,527) | 5,834) | |
| Total debt | 14,023) | 13,901) | 12,672) | 8,527) | 6,334) | |
| Operating lease liabilities (recorded on Other current liabilities) | 140) | 127) | 125) | 106) | —) | |
| Operating lease liabilities (recorded on Other liabilities) | 630) | 645) | 726) | 656) | —) | |
| Total debt (including operating lease liability) | 14,793) | 14,673) | 13,523) | 9,289) | 6,334) | |
| Total Mastercard Incorporated stockholders’ equity | 6,298) | 7,312) | 6,391) | 5,893) | 5,395) | |
| Total capital (including operating lease liability) | 21,091) | 21,985) | 19,914) | 15,182) | 11,729) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.70 | 0.67 | 0.68 | 0.61 | 0.54 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.13 | 0.15 | — | — | — | |
| Adobe Inc. | 0.25 | 0.24 | 0.26 | — | — | |
| AppLovin Corp. | 0.64 | 0.61 | — | — | — | |
| Cadence Design Systems Inc. | 0.25 | 0.15 | — | — | — | |
| Datadog Inc. | 0.37 | 0.44 | — | — | — | |
| International Business Machines Corp. | 0.71 | 0.74 | — | — | — | |
| Intuit Inc. | 0.31 | 0.20 | — | — | — | |
| Microsoft Corp. | 0.32 | 0.37 | — | — | — | |
| Oracle Corp. | 1.08 | 0.94 | — | — | — | |
| Palantir Technologies Inc. | 0.09 | 0.10 | — | — | — | |
| Palo Alto Networks Inc. | 0.95 | 0.85 | — | — | — | |
| Salesforce Inc. | 0.20 | 0.13 | — | — | — | |
| ServiceNow Inc. | 0.31 | 0.37 | — | — | — | |
| Synopsys Inc. | 0.11 | 0.11 | 0.12 | — | — | |
| Workday Inc. | 0.32 | 0.41 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.45 | 0.48 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.43 | 0.47 | — | — | — | |
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 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 14,793 ÷ 21,091 = 0.70
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2018 to 2022 reveals a consistent increase in leverage and a strategic shift in the composition of the capital structure. Total debt, inclusive of operating lease liabilities, grew substantially over the five-year period, while the total capital base expanded until 2021 before experiencing a slight contraction in 2022.
- Total Debt Expansion
- Total debt increased from US$ 6,334 million in 2018 to US$ 14,793 million by the end of 2022. The most significant growth occurred between 2019 and 2020, where debt rose by approximately 45.6%, indicating a period of accelerated borrowing or an increase in lease obligations.
- Total Capital Trends
- Total capital followed a general upward trajectory from US$ 11,729 million in 2018 to a peak of US$ 21,985 million in 2021. However, a reversal occurred in 2022, with total capital decreasing to US$ 21,091 million despite the continued increase in total debt.
- Debt to Capital Ratio Analysis
- The debt to capital ratio climbed steadily from 0.54 in 2018 to 0.70 in 2022. The ratio rose sharply to 0.68 by 2020 and remained elevated through 2022. This upward trend demonstrates that debt has grown at a faster rate than the overall capital base, resulting in a higher proportion of debt financing relative to equity and other capital components.
The convergence of increasing total debt and a contracting capital base in 2022 resulted in the highest leverage ratio of the period. This pattern suggests a heightened reliance on debt to sustain operations or fund growth, which has fundamentally altered the solvency profile of the organization since 2018.
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Debt to Assets
Mastercard Inc., debt to assets 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) | ||||||
| Short-term debt | 274) | 792) | 649) | —) | 500) | |
| Long-term debt, excluding current portion | 13,749) | 13,109) | 12,023) | 8,527) | 5,834) | |
| Total debt | 14,023) | 13,901) | 12,672) | 8,527) | 6,334) | |
| Total assets | 38,724) | 37,669) | 33,584) | 29,236) | 24,860) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.36 | 0.37 | 0.38 | 0.29 | 0.25 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Accenture PLC | 0.00 | 0.00 | — | — | — | |
| Adobe Inc. | 0.15 | 0.15 | 0.17 | — | — | |
| AppLovin Corp. | 0.56 | 0.53 | — | — | — | |
| Cadence Design Systems Inc. | 0.15 | 0.08 | — | — | — | |
| Datadog Inc. | 0.25 | 0.31 | — | — | — | |
| International Business Machines Corp. | 0.40 | 0.39 | — | — | — | |
| Intuit Inc. | 0.25 | 0.13 | — | — | — | |
| Microsoft Corp. | 0.18 | 0.21 | — | — | — | |
| Oracle Corp. | 0.69 | 0.64 | — | — | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | — | — | — | |
| Palo Alto Networks Inc. | 0.30 | 0.31 | — | — | — | |
| Salesforce Inc. | 0.12 | 0.04 | — | — | — | |
| ServiceNow Inc. | 0.11 | 0.15 | — | — | — | |
| Synopsys Inc. | 0.00 | 0.01 | 0.02 | — | — | |
| Workday Inc. | 0.18 | 0.21 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Software & Services | 0.26 | 0.28 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Information Technology | 0.26 | 0.29 | — | — | — | |
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 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 14,023 ÷ 38,724 = 0.36
2 Click competitor name to see calculations.
The financial trajectory between 2018 and 2022 is characterized by a simultaneous increase in total debt and total assets, resulting in a shifting solvency profile. While the asset base expanded consistently, the growth in debt obligations was more aggressive during the first three years of the period.
- Total Debt Expansion
- Total debt experienced a significant upward trajectory, increasing from 6,334 million US$ in 2018 to 14,023 million US$ by 2022. The most pronounced acceleration occurred between 2019 and 2020, where debt obligations rose from 8,527 million US$ to 12,672 million US$.
- Asset Growth
- Total assets grew steadily over the five-year period, rising from 24,860 million US$ in 2018 to 38,724 million US$ in 2022. This consistent growth indicates a continuous expansion of the balance sheet throughout the analyzed timeframe.
- Debt to Assets Ratio Dynamics
- The debt to assets ratio increased from 0.25 in 2018 to a peak of 0.38 in 2020, reflecting that debt accumulation outpaced asset growth during this interval. Following the 2020 peak, the ratio stabilized and entered a slight downward trend, settling at 0.36 by 2022. This pattern suggests a period of intensified leveraging followed by a phase of stabilization in the capital structure.
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Debt to Assets (including Operating Lease Liability)
Mastercard Inc., debt to assets (including operating lease liability) 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) | ||||||
| Short-term debt | 274) | 792) | 649) | —) | 500) | |
| Long-term debt, excluding current portion | 13,749) | 13,109) | 12,023) | 8,527) | 5,834) | |
| Total debt | 14,023) | 13,901) | 12,672) | 8,527) | 6,334) | |
| Operating lease liabilities (recorded on Other current liabilities) | 140) | 127) | 125) | 106) | —) | |
| Operating lease liabilities (recorded on Other liabilities) | 630) | 645) | 726) | 656) | —) | |
| Total debt (including operating lease liability) | 14,793) | 14,673) | 13,523) | 9,289) | 6,334) | |
| Total assets | 38,724) | 37,669) | 33,584) | 29,236) | 24,860) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.38 | 0.39 | 0.40 | 0.32 | 0.25 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.07 | 0.08 | — | — | — | |
| Adobe Inc. | 0.17 | 0.17 | 0.19 | — | — | |
| AppLovin Corp. | 0.57 | 0.54 | — | — | — | |
| Cadence Design Systems Inc. | 0.18 | 0.11 | — | — | — | |
| Datadog Inc. | 0.28 | 0.34 | — | — | — | |
| International Business Machines Corp. | 0.42 | 0.42 | — | — | — | |
| Intuit Inc. | 0.27 | 0.16 | — | — | — | |
| Microsoft Corp. | 0.21 | 0.25 | — | — | — | |
| Oracle Corp. | 0.73 | 0.66 | — | — | — | |
| Palantir Technologies Inc. | 0.07 | 0.08 | — | — | — | |
| Palo Alto Networks Inc. | 0.33 | 0.35 | — | — | — | |
| Salesforce Inc. | 0.15 | 0.10 | — | — | — | |
| ServiceNow Inc. | 0.17 | 0.21 | — | — | — | |
| Synopsys Inc. | 0.07 | 0.08 | 0.08 | — | — | |
| Workday Inc. | 0.20 | 0.26 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.30 | 0.32 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.29 | 0.31 | — | — | — | |
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 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 14,793 ÷ 38,724 = 0.38
2 Click competitor name to see calculations.
An evaluation of the solvency position between 2018 and 2022 reveals a period of increased leverage followed by a phase of relative stabilization. Total debt, including operating lease liabilities, experienced substantial growth, rising from US$ 6,334 million in 2018 to US$ 14,793 million by the end of 2022.
- Debt to Assets Ratio Trend
- A consistent upward trajectory is observed in the first three years of the period, with the ratio increasing from 0.25 in 2018 to a peak of 0.40 in 2020. This indicates that debt accumulation outpaced asset growth during this interval. Following the 2020 peak, a marginal downward trend emerged, with the ratio declining slightly to 0.39 in 2021 and 0.38 in 2022.
- Asset Base Expansion
- Total assets grew steadily throughout the analyzed timeframe, expanding from US$ 24,860 million in 2018 to US$ 38,724 million in 2022. The growth in the asset base acted as a moderating factor against the rising debt levels, particularly in the latter part of the period.
- Leverage Dynamics and Stabilization
- The most aggressive increase in leverage occurred between 2019 and 2020, during which total debt grew by approximately 45%. However, the rate of debt increase decelerated significantly between 2021 and 2022, growing by only 0.8% in the final year. This deceleration, coupled with continued asset growth, resulted in the stabilization of the debt-to-assets ratio below the 0.40 threshold.
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Financial Leverage
Mastercard Inc., financial leverage 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) | ||||||
| Total assets | 38,724) | 37,669) | 33,584) | 29,236) | 24,860) | |
| Total Mastercard Incorporated stockholders’ equity | 6,298) | 7,312) | 6,391) | 5,893) | 5,395) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 6.15 | 5.15 | 5.25 | 4.96 | 4.61 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Accenture PLC | 2.14 | 2.21 | — | — | — | |
| Adobe Inc. | 1.93 | 1.84 | 1.83 | — | — | |
| AppLovin Corp. | 3.07 | 2.88 | — | — | — | |
| Cadence Design Systems Inc. | 1.87 | 1.60 | — | — | — | |
| Datadog Inc. | 2.13 | 2.29 | — | — | — | |
| International Business Machines Corp. | 5.80 | 6.98 | — | — | — | |
| Intuit Inc. | 1.69 | 1.57 | — | — | — | |
| Microsoft Corp. | 2.19 | 2.35 | — | — | — | |
| Oracle Corp. | — | 25.03 | — | — | — | |
| Palantir Technologies Inc. | 1.35 | 1.42 | — | — | — | |
| Palo Alto Networks Inc. | 58.35 | 16.14 | — | — | — | |
| Salesforce Inc. | 1.64 | 1.60 | — | — | — | |
| ServiceNow Inc. | 2.64 | 2.92 | — | — | — | |
| Synopsys Inc. | 1.71 | 1.65 | 1.64 | — | — | |
| Workday Inc. | 2.31 | 2.66 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Software & Services | 2.72 | 2.95 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Information Technology | 2.65 | 2.87 | — | — | — | |
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 2022 Calculation
Financial leverage = Total assets ÷ Total Mastercard Incorporated stockholders’ equity
= 38,724 ÷ 6,298 = 6.15
2 Click competitor name to see calculations.
The financial trajectory between 2018 and 2022 is characterized by a consistent expansion of the asset base alongside an increasing reliance on leverage to fund operations and growth.
- Asset Growth
- A steady upward trend is observed in total assets, which increased from US$ 24,860 million in 2018 to US$ 38,724 million by the end of 2022. This represents a sustained and consistent growth in the company's resource base over the five-year period.
- Equity Performance
- Stockholders' equity exhibited steady growth from 2018 through 2021, rising from US$ 5,395 million to a peak of US$ 7,312 million. However, a notable contraction occurred in 2022, with equity decreasing to US$ 6,298 million, marking a departure from the previous growth trend.
- Financial Leverage Trends
- The financial leverage ratio demonstrated a general increase from 4.61 in 2018 to 6.15 in 2022. While the ratio showed marginal fluctuations between 2020 and 2021, a significant spike occurred in 2022. This increase is attributable to the combination of continued asset growth and a simultaneous reduction in total stockholders' equity, indicating a higher proportion of liabilities relative to equity at the close of the period.
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Interest Coverage
Mastercard Inc., interest coverage 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) | ||||||
| Net income | 9,930) | 8,687) | 6,411) | 8,118) | 5,859) | |
| Add: Income tax expense | 1,802) | 1,620) | 1,349) | 1,613) | 1,345) | |
| Add: Interest expense | 471) | 431) | 380) | 224) | 186) | |
| Earnings before interest and tax (EBIT) | 12,203) | 10,738) | 8,140) | 9,955) | 7,390) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 25.91 | 24.91 | 21.42 | 44.44 | 39.73 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Accenture PLC | 195.34 | 131.46 | — | — | — | |
| Adobe Inc. | 54.64 | 51.49 | 37.00 | — | — | |
| AppLovin Corp. | -0.19 | 1.45 | — | — | — | |
| Cadence Design Systems Inc. | 46.58 | 46.26 | — | — | — | |
| Datadog Inc. | -1.30 | 0.12 | — | — | — | |
| International Business Machines Corp. | 1.97 | 5.20 | — | — | — | |
| Intuit Inc. | 32.38 | 89.14 | — | — | — | |
| Microsoft Corp. | 41.58 | 31.31 | — | — | — | |
| Oracle Corp. | 3.84 | 6.28 | — | — | — | |
| Palantir Technologies Inc. | -87.97 | -133.20 | — | — | — | |
| Palo Alto Networks Inc. | -6.56 | -1.85 | — | — | — | |
| Salesforce Inc. | 7.93 | 21.49 | — | — | — | |
| ServiceNow Inc. | 15.78 | 9.89 | — | — | — | |
| Synopsys Inc. | 657.96 | 240.38 | 125.16 | — | — | |
| Workday Inc. | 1.97 | -3.00 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Software & Services | 17.77 | 17.09 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Information Technology | 22.18 | 19.66 | — | — | — | |
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 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 12,203 ÷ 471 = 25.91
2 Click competitor name to see calculations.
The financial analysis of solvency indicates a period of fluctuation in interest coverage capacity between 2018 and 2022. While operating profitability has generally expanded, a consistent increase in debt servicing costs has moderated the overall coverage ratio.
- Earnings Before Interest and Tax (EBIT)
- Operating earnings exhibited a general upward trajectory, growing from US$ 7,390 million in 2018 to US$ 12,203 million in 2022. A temporary contraction was observed in 2020, where EBIT declined to US$ 8,140 million, before rebounding strongly in 2021 and 2022.
- Interest Expense
- A continuous and uninterrupted increase in interest expenses is evident over the analyzed period. Annual costs rose from US$ 186 million in 2018 to US$ 471 million in 2022, indicating a steady expansion of the company's interest obligations.
- Interest Coverage Ratio
- The interest coverage ratio reached a peak of 44.44 in 2019, signaling a very high margin of safety. However, a sharp decline occurred in 2020, with the ratio falling to 21.42 due to the combined effect of lower operating earnings and higher interest costs. Although the ratio recovered to 25.91 by the end of 2022, it remained substantially lower than the pre-2020 levels, reflecting a shift in the balance between earnings generation and debt costs.
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Fixed Charge Coverage
Mastercard Inc., fixed charge coverage 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) | ||||||
| Net income | 9,930) | 8,687) | 6,411) | 8,118) | 5,859) | |
| Add: Income tax expense | 1,802) | 1,620) | 1,349) | 1,613) | 1,345) | |
| Add: Interest expense | 471) | 431) | 380) | 224) | 186) | |
| Earnings before interest and tax (EBIT) | 12,203) | 10,738) | 8,140) | 9,955) | 7,390) | |
| Add: Operating lease amortization expense | 137) | 122) | 123) | 99) | 114) | |
| Earnings before fixed charges and tax | 12,340) | 10,860) | 8,263) | 10,054) | 7,504) | |
| Interest expense | 471) | 431) | 380) | 224) | 186) | |
| Operating lease amortization expense | 137) | 122) | 123) | 99) | 114) | |
| Fixed charges | 608) | 553) | 503) | 323) | 300) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 20.30 | 19.64 | 16.43 | 31.13 | 25.01 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Accenture PLC | 12.25 | 10.41 | — | — | — | |
| Adobe Inc. | 26.79 | 25.59 | 18.77 | — | — | |
| AppLovin Corp. | -0.07 | 1.35 | — | — | — | |
| Cadence Design Systems Inc. | 15.50 | 13.77 | — | — | — | |
| Datadog Inc. | 0.09 | 0.55 | — | — | — | |
| International Business Machines Corp. | 1.52 | 3.13 | — | — | — | |
| Intuit Inc. | 14.67 | 25.58 | — | — | — | |
| Microsoft Corp. | 19.50 | 16.90 | — | — | — | |
| Oracle Corp. | 3.22 | 5.17 | — | — | — | |
| Palantir Technologies Inc. | -5.06 | -7.89 | — | — | — | |
| Palo Alto Networks Inc. | -1.18 | -1.09 | — | — | — | |
| Salesforce Inc. | 2.18 | 2.92 | — | — | — | |
| ServiceNow Inc. | 3.87 | 2.95 | — | — | — | |
| Synopsys Inc. | 12.91 | 9.29 | 7.46 | — | — | |
| Workday Inc. | 1.15 | -0.69 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Software & Services | 9.33 | 9.14 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Information Technology | 13.28 | 12.13 | — | — | — | |
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 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 12,340 ÷ 608 = 20.30
2 Click competitor name to see calculations.
The financial performance relative to fixed obligations indicates a period of volatility followed by a stabilizing recovery. While a strong ability to meet fixed charges is maintained, the margin of safety fluctuated significantly between 2018 and 2022.
- Earnings Before Fixed Charges and Tax
- A general upward trajectory in earnings is observed, rising from US$ 7,504 million in 2018 to US$ 12,340 million by 2022. A notable contraction occurred in 2020, where earnings decreased to US$ 8,263 million, representing a deviation from the growth trend seen in 2019. Subsequent years showed a robust recovery, with earnings exceeding pre-2020 levels by 2021.
- Fixed Charges
- Fixed charges have experienced a consistent increase throughout the five-year period. Obligations grew from US$ 300 million in 2018 to US$ 608 million in 2022. A significant escalation is noted between 2019 and 2020, where charges rose from US$ 323 million to US$ 503 million, indicating an expansion of fixed financial commitments during that interval.
- Fixed Charge Coverage Ratio
- The coverage ratio peaked in 2019 at 31.13 before experiencing a sharp decline to 16.43 in 2020. This compression was the result of the simultaneous decrease in earnings and the increase in fixed charges. Since 2020, the ratio has trended upward, reaching 20.30 by the end of 2022. Although the ratio remains lower than the 2019 peak, the current levels suggest a substantial capacity to cover fixed obligations.
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