Mastercard Inc. (NYSE:MA)

Debt to equity

The debt to equity ratio exhibits an overall upward trend from March 2018 through March 2023. Starting at 1.13 in early 2018, the ratio fluctuates moderately until late 2019 when a notable increase occurs, reaching 2.31 by March 2020. Despite some fluctuations afterward, the ratio continues to rise, peaking at 2.92 in March 2023. This pattern suggests a growing reliance on debt financing relative to equity over the period.

Debt to capital

This ratio reflects a similar increasing trend, rising from 0.53 in March 2018 to 0.74 by March 2023. Incremental increases are evident in the 2019–2020 period, followed by stability around the 0.68 to 0.70 range until a further increase in early 2023. This indicates an increasing proportion of debt within the company's capital structure.

Debt to assets

The debt to assets ratio also trends upward over the analyzed quarters, moving from 0.28 in early 2018 to 0.40 by the end of 2022, briefly dipping to 0.36 in March 2023 before climbing back to 0.40. Notably, the ratio jumps sharply in the first quarter of 2020, likely influenced by external economic factors during that time. The increasing ratio suggests a higher share of the company’s assets being financed through debt.

Financial leverage

Financial leverage shows a general increasing movement from 4.02 in March 2018 to 7.31 by March 2023. While there are occasional declines, the overall pattern is one of rising leverage, particularly marked from 2019 onward. This trend indicates an expansion in the use of borrowed funds relative to equity, consistent with the increases observed in the debt ratios.

Interest coverage

Interest coverage data are available only from late 2018 onward and reveal a declining trend. The ratio peaks at around 44.44 in December 2019 but subsequently decreases steadily over the following quarters, reaching approximately 24.96 by March 2023. This decline suggests that the company’s ability to meet interest expenses from operating earnings has weakened over time, potentially reflecting increased debt levels or reduced operating profitability relative to interest obligations.

The data reveals the evolution of total debt, stockholders’ equity, and the debt to equity ratio over a series of quarterly periods. A detailed examination highlights several notable trends and changes in financial structure.

Total Debt

Total debt demonstrates an overall increasing pattern from March 2018 to March 2023. Initial quarters show a relatively stable range around 6,000 to 8,500 million US dollars. Starting in early 2020, there is a marked rise, peaking near 15,568 million US dollars by March 2023. This sharp increase post-2019 suggests heightened leverage or increased borrowing activity during this period.

Total Stockholders’ Equity

Stockholders’ equity exhibits more volatility compared to total debt. From March 2018 through early 2020, equity fluctuates moderately between approximately 5,000 and 6,500 million US dollars. In 2020 and 2021, it reaches its highest levels, surpassing 7,000 million at times. However, from late 2021 onward, equity trends downward, settling near 5,330 million US dollars by March 2023, the lowest within the observed timeframe.

Debt to Equity Ratio

The debt to equity ratio displays a clear upward trend over the observed periods, reflecting increasing leverage. Starting at around 1.1 in early 2018, the ratio stays relatively consistent until mid-2019 when it begins to climb sharply, reaching 2.31 by March 2020. Following slight fluctuations, the ratio remains elevated above 2.0 through late 2022 and spikes to 2.92 by March 2023. This indicates a significant rise in debt levels relative to equity, possibly implying greater financial risk or an aggressive capital structure strategy.

The financial data reveals several notable trends over the analyzed quarterly periods, specifically focusing on the company's debt structure and capital base.

Total Debt

Total debt amounts show a general increasing trend from March 31, 2018, through March 31, 2023. Beginning at approximately $6.47 billion in early 2018, debt levels moderately increased with some fluctuations up to late 2019. A significant rise is observed starting March 31, 2020, with the total debt crossing $12 billion and continuing to increase, peaking at $15.57 billion by March 31, 2023. This indicates an increased reliance on debt financing over the period, particularly pronounced during and after the onset of 2020.

Total Capital

Total capital also exhibits an upward trajectory overall, beginning near $12.17 billion in the first quarter of 2018 and rising to about $20.9 billion by the first quarter of 2023. Despite some quarterly fluctuations, the total capital base expanded significantly, especially from around March 2020 onward, aligning with the observed increase in total debt. This increment suggests a growth in the company’s capital structure, potentially reflecting increased equity or retained earnings alongside rising debt.

Debt to Capital Ratio

The debt to capital ratio reflects the proportion of debt financing relative to the total capital. Initially stable at approximately 0.53 through the early part of the dataset (2018), this ratio increased notably beginning mid-2019. It rose sharply in early 2020, reaching roughly 0.7, and hovered around this elevated level with minor deviations throughout 2020 to early 2023. The latest figure in March 2023 stands at about 0.74, the highest in the period analyzed. This pattern indicates a steadily growing dependency on debt within the overall capital structure, suggesting a strategic shift or increased leverage over time.

In summary, the company has progressively increased its total debt as well as its overall capital base, with the share of debt in total capital rising rather consistently from 2019 onwards. This trend points toward an increased leveraging strategy, potentially aimed at capitalizing on favorable borrowing conditions or supporting expanded operations. It may warrant further examination of debt servicing capacity and associated risks given the heightened leverage levels observed.

The analysis of the quarterly financial data reveals several key trends related to total debt, total assets, and the debt-to-assets ratio over the observed time frame.

Total Debt

Total debt exhibits an overall upward trend across the periods. Initially, it fluctuates moderately between approximately US$5.9 billion and US$8.5 billion throughout 2018 and 2019. Beginning in early 2020, there is a noticeable increase, with debt rising sharply to around US$12.5 billion and then gradually climbing further to exceed US$15.5 billion by the first quarter of 2023. This sustained growth in debt suggests a strategy involving increased leverage or financing activities during these years.

Total Assets

Total assets demonstrate steady growth over the timeframe. Starting at about US$22.9 billion in the first quarter of 2018, assets show incremental increases quarter-over-quarter, reaching nearly US$29.2 billion by the end of 2019. The asset base continues expanding through 2020 to 2023, ending at roughly US$38.9 billion, reflecting a consistent asset accumulation which may indicate business expansion or asset acquisition.

Debt-to-Assets Ratio

The debt-to-assets ratio experiences some fluctuation but generally trends upward. Early values oscillate around 0.25 to 0.30 during 2018 and 2019, indicating moderate leverage. A significant increase is observed in 2020, with the ratio moving above 0.38 and peaking near 0.41, coinciding with the marked increase in total debt. Post-2020, the ratio remains elevated between approximately 0.36 and 0.40, implying that the rise in debt outpaces the growth in assets to some extent, maintaining a relatively higher leverage level than in prior years.

In summary, the data indicates a strategic increase in total debt alongside steady asset growth, resulting in a higher leverage position. This pattern may reflect corporate financing decisions in response to external conditions or initiatives to support expansion and operational needs. The maintenance of a higher debt-to-assets ratio in recent years warrants monitoring to ensure sustainability and manage financial risk appropriately.

Total assets

Total assets demonstrate a general upward trend over the analyzed periods, increasing from 22,944 million US dollars at the end of Q1 2018 to 38,936 million US dollars by Q1 2023. This growth is not strictly linear, with some periods showing modest declines or slower growth, such as the slight drop observed between Q1 and Q2 of 2022. The most significant increases appear around late 2019 to early 2020 and again from late 2020 through 2021, indicating periods of accelerated asset accumulation.

Total Mastercard Incorporated stockholders’ equity

Stockholders’ equity shows a more fluctuating pattern over time compared to total assets. Starting at 5,703 million US dollars in Q1 2018, equity declines until the end of 2018, reaching 5,395 million, before fluctuating within a range approximately from 5,000 to 7,300 million in subsequent quarters. A notable peak occurs in Q4 2021 at 7,312 million. Thereafter, equity declines significantly, dropping to 5,330 million by Q1 2023. This volatility suggests varying factors impacting retained earnings, share repurchases, or dividend distributions across the periods.

Financial leverage (ratio)

The financial leverage ratio exhibits an overall increasing trend across the five-year span, starting from 4.02 in Q1 2018 and rising to 7.31 by Q1 2023. There are periodic fluctuations within this trend, but the general trajectory indicates progressively greater use of debt or liabilities relative to equity. The ratio notably jumps above 6.0 after mid-2022, suggesting a marked increase in leverage in the most recent periods.

The concurrent increase in total assets alongside a relatively stagnant or declining equity base contributes to this rising leverage ratio. Such a pattern may reflect the company's strategic decisions on financing growth or operational challenges affecting equity levels.

Earnings before interest and tax (EBIT)

The EBIT values demonstrate an overall upward trend across the examined periods. Starting at 1,846 million USD in March 2018, the figures peaked variously with notable growth phases such as the increase from 1,262 million USD in December 2018 to 2,539 million USD in December 2019. Despite a dip in the first half of 2020, likely influenced by external factors during that year, the EBIT values recovered strongly, reaching a high of 3,216 million USD in June 2021, maintaining elevated levels thereafter. The data for 2022 shows relatively stable performance around the 2,900-3,190 million USD range, followed by a slight decrease to 2,985 million USD in March 2023.

Interest expense

The interest expense has exhibited a consistent upward trend over the periods presented. Beginning at 43 million USD in March 2018, it increased incrementally to reach 132 million USD by March 2023. Notable increments took place particularly in 2020 and onwards, where the figures rose from 69 million USD in March 2020 to over 100 million USD in subsequent quarters, reflecting either increased borrowing, changes in debt structure, or higher interest rates.

Interest coverage ratio

The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, has moderately declined over the observed quarters. Initial ratios in 2018 exceeded 39, peaking around 44.44 in December 2018; thereafter, the ratio trended downward steadily to values around 25 by the end of the dataset in March 2023. This decline signals a reduction in the margin of safety concerning interest payments, likely influenced by rising interest expenses in combination with fluctuating EBIT. Nevertheless, the ratio remains at a relatively strong level above 20, indicating continued robust coverage of interest charges.