Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
Mastercard Inc., profitability ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Return on Sales | ||||||
| Operating profit margin | ||||||
| Net profit margin | ||||||
| Return on Investment | ||||||
| Return on equity (ROE) | ||||||
| Return on assets (ROA) | ||||||
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).
- Operating Profit Margin
- The operating profit margin exhibited an overall upward trend from 48.71% in 2018 to 55.15% in 2022, with a peak of 57.24% in 2019. Despite a dip in 2020 to 52.81%, the margin rebounded slightly in subsequent years, indicating effective cost control and operational efficiency improvements over the period.
- Net Profit Margin
- The net profit margin showed variability, rising sharply from 39.19% in 2018 to 48.08% in 2019, followed by a decline to 41.9% in 2020. It recovered to 46% in 2021 but decreased marginally to 44.66% in 2022. This pattern suggests fluctuations possibly linked to net expenses or taxes impacting the overall profitability after operating income.
- Return on Equity (ROE)
- Return on equity demonstrated significant volatility. It increased from a very high 108.6% in 2018 to a peak of 137.76% in 2019, then sharply declined to 100.31% in 2020. Subsequently, it rose to 118.8% in 2021 and reached its highest level at 157.67% in 2022. The trend indicates strong profitability relative to shareholders' equity, with notable spikes possibly reflecting financial leverage or extraordinary gains.
- Return on Assets (ROA)
- Return on assets decreased from 23.57% in 2018 to 19.09% in 2020, showing a downward trend in asset utilization efficiency. However, it recovered to 23.06% in 2021 and further improved to 25.64% in 2022. This improvement suggests better asset management or increased profit generation from assets in recent years despite earlier challenges.
Return on Sales
Return on Investment
Operating Profit Margin
Mastercard Inc., operating 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) | ||||||
| Operating income | ||||||
| Net revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
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
Operating profit margin = 100 × Operating income ÷ Net revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- Operating income demonstrated a generally upward trend over the observed periods, increasing from 7,282 million USD in 2018 to 12,264 million USD in 2022. There was a notable dip in 2020 with a decrease to 8,081 million USD from 9,664 million USD in 2019, followed by recovery and growth in subsequent years.
- Net Revenue
- Net revenue exhibited fluctuation but an overall increasing pattern, rising from 14,950 million USD in 2018 to 22,237 million USD in 2022. Similar to operating income, revenue declined in 2020 to 15,301 million USD from 16,883 million USD in 2019, then rebounded sharply in 2021 and continued growing into 2022.
- Operating Profit Margin
- The operating profit margin showed variation, beginning at 48.71% in 2018, increasing substantially to 57.24% in 2019, and decreasing to 52.81% in 2020. Post-2020, the margin stabilized around the mid-50s percentile, with a slight rise to 55.15% in 2022. This suggests enhanced efficiency or profitability post the 2020 downturn.
Net Profit Margin
Mastercard Inc., net 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) | ||||||
| Net income | ||||||
| Net revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
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
Net profit margin = 100 × Net income ÷ Net revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income exhibits an overall upward trend over the analyzed period. Starting from $5,859 million in 2018, income increased significantly to $8,118 million in 2019. After a decline to $6,411 million in 2020, which may indicate some operational or market challenges during that year, the net income rebounded strongly in the following years, reaching $8,687 million in 2021 and further rising to $9,930 million in 2022. This suggests improved profitability and possibly effective cost management or revenue growth post-2020.
- Net Revenue
- Net revenue shows consistent growth with the exception of a slight decrease in 2020. The revenue rose from $14,950 million in 2018 to $16,883 million in 2019, then declined to $15,301 million in 2020, indicating a potential impact of adverse conditions during that year. Subsequently, revenue increased sharply to $18,884 million in 2021 and continued to grow to $22,237 million in 2022. This overall trend reflects a strong recovery and expansion in sales or service income after the 2020 downturn.
- Net Profit Margin
- The net profit margin experienced fluctuations but remained relatively high throughout the period. It was at 39.19% in 2018 and peaked at 48.08% in 2019, showing an improvement in profitability efficiency. The margin dropped to 41.9% in 2020, coinciding with the reduced net income and revenue in the same year, suggesting lower profitability. In the subsequent years, the margin increased to 46% in 2021 but slightly declined to 44.66% in 2022. Despite these fluctuations, the company maintained a strong profit margin above 39%, indicating consistent operational efficiency.
Return on Equity (ROE)
Mastercard Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total Mastercard Incorporated stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| ROE, Sector | ||||||
| Software & Services | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
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
ROE = 100 × Net income ÷ Total Mastercard Incorporated stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income showed a fluctuating but generally increasing trend over the five-year period. Starting at 5,859 million US dollars in 2018, net income rose significantly to 8,118 million in 2019. This was followed by a decline to 6,411 million in 2020, likely influenced by external factors during that year. Subsequently, net income recovered and increased to 8,687 million in 2021 and further to 9,930 million in 2022, marking the highest level in the given period.
- Total Stockholders’ Equity
- The total stockholders’ equity demonstrated a consistent upward movement from 2018 to 2021, increasing from 5,395 million US dollars in 2018 to 7,312 million in 2021. However, in 2022, there was a noticeable decline to 6,298 million dollars. This downturn in equity contrasts with the rising net income trend in 2022, suggesting potential changes in capital management or distribution policies during that year.
- Return on Equity (ROE)
- ROE exhibited significant volatility but remained at exceptionally high levels throughout the period. It started at 108.6% in 2018, increased sharply to 137.76% in 2019, then dropped to 100.31% in 2020. The metric improved again in 2021 to 118.8%, followed by a substantial surge to 157.67% in 2022. The elevated ROE values indicate the company’s strong ability to generate profits from its equity, despite fluctuations in net income and equity levels.
- Overall Analysis
- The financial performance showed resilience with net income rebounding after a dip in 2020 and achieving record levels by 2022. Stockholders’ equity generally increased but faced a reversal in the last reported year, which may require further investigation into underlying causes such as share buybacks or dividend payments. ROE maintained high values, reflecting effective utilization of equity, although the volatility suggests changes in either profitability or equity base over time.
Return on Assets (ROA)
Mastercard Inc., ROA 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 | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| ROA, Sector | ||||||
| Software & Services | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
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
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income showed a strong upward trend overall. From 2018 to 2019, there was a significant increase from 5,859 million to 8,118 million US dollars. This was followed by a decline in 2020 to 6,411 million, likely reflecting adverse conditions or extraordinary events. However, the subsequent years demonstrated recovery and growth, with net income rising to 8,687 million in 2021 and further increasing to 9,930 million in 2022, reaching the highest value in the analyzed period.
- Total Assets
- Total assets consistently increased over the five-year span. Starting at 24,860 million US dollars in 2018, assets grew each year, reaching 29,236 million in 2019, then 33,584 million in 2020, 37,669 million in 2021, and finally 38,724 million in 2022. This steady growth indicates continued asset accumulation and potential expansion of operational capacity or investment by the entity.
- Return on Assets (ROA)
- The return on assets displayed volatility with a generally high level of profitability relative to assets. ROA peaked in 2019 at 27.77%, marking the highest efficiency in asset use across the years. It then declined notably in 2020 to 19.09%, mirroring the reduction observed in net income during the same year. Nonetheless, ROA improved again in 2021 to 23.06% and further to 25.64% in 2022, indicating a recovery in the company's effective use of assets to generate earnings.
- Overall Insights
- The financial data reveals resilience despite a dip in 2020, with both net income and ROA rebounding in subsequent years. The consistent increase in total assets alongside improving profitability ratios suggests strengthened operational performance and asset management. The fluctuations in net income and ROA may reflect external challenges or industry-wide conditions impacting profitability temporarily but were successfully managed, as evidenced by subsequent recovery and growth.