Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Short-term Activity Ratios (Summary)
Mastercard Inc., short-term (operating) activity 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).
- Receivables Turnover
- There is a clear upward trend in receivables turnover from 6.1 in 2018 to 17.51 in 2022, indicating increased efficiency in collecting receivables over the years. A notable acceleration is observed starting in 2020, with the ratio jumping significantly from 5.64 in 2019 to 8.97 in 2020 and continuing to rise thereafter.
- Payables Turnover
- Payables turnover also shows an overall increasing trend, rising from 6.83 in 2018 to a peak of 20.68 in 2021, and slightly declining to 20.02 in 2022. This suggests that the company has been paying its suppliers more quickly over time, especially from 2019 through 2021, although the slight decrease in 2022 could indicate a moderation in payment speed.
- Working Capital Turnover
- Working capital turnover displays some volatility. It starts at 3.27 in 2018, remains fairly stable through 2019, then declines sharply to 2.11 in 2020. However, a strong recovery follows, with the ratio increasing substantially to 4.99 in 2021 and then almost doubling to 9.13 in 2022. This indicates that the company significantly improved its efficiency in using working capital to generate sales in the later years.
- Average Receivable Collection Period
- The average collection period decreases steadily from 60 days in 2018 to 21 days in 2022. This shortening period aligns with the increasing receivables turnover, reflecting faster collection of receivables and improved cash flow management over time.
- Average Payables Payment Period
- The average payment period for payables follows a decreasing trend from 53 days in 2018 to 18 days in 2021 and remains stable at 18 days in 2022. This trend corroborates the increasing payables turnover, indicating quicker payment to suppliers and potentially improved supplier relationships or credit terms management.
Turnover Ratios
Average No. Days
Receivables Turnover
Mastercard Inc., receivables turnover 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 revenue | ||||||
| Settlement assets | ||||||
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | ||||||
| Benchmarks | ||||||
| Receivables Turnover, 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. | ||||||
| Receivables Turnover, Sector | ||||||
| Software & Services | ||||||
| Receivables Turnover, 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
Receivables turnover = Net revenue ÷ Settlement assets
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial figures over the five-year period reveals several key trends and shifts in performance metrics.
- Net revenue
- Net revenue exhibits an overall upward trajectory, increasing from 14,950 million US dollars in 2018 to 22,237 million US dollars in 2022. Despite a dip in 2020 to 15,301 million, revenue rebounded significantly in 2021 and continued to grow robustly into 2022, suggesting resilience and strong growth momentum post-2020.
- Settlement assets
- The value of settlement assets shows a marked decline over the period, starting at 2,452 million US dollars in 2018 and decreasing steadily to 1,270 million in 2022. This continuous reduction may imply changes in operational structure, risk management adjustments, or shifts in working capital requirements.
- Receivables turnover
- Receivables turnover displays a substantial increase, moving from a ratio of 6.1 in 2018 up to 17.51 in 2022. This sharp rise reflects a significant improvement in the efficiency with which receivables are collected, indicating enhanced cash flow management and possibly stricter credit policies or improved collection processes.
Payables Turnover
Mastercard Inc., payables turnover 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 revenue | ||||||
| Settlement obligations | ||||||
| Short-term Activity Ratio | ||||||
| Payables turnover1 | ||||||
| Benchmarks | ||||||
| Payables Turnover, 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. | ||||||
| Payables Turnover, Sector | ||||||
| Software & Services | ||||||
| Payables Turnover, 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
Payables turnover = Net revenue ÷ Settlement obligations
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several important trends over the five-year period from 2018 to 2022. Net revenue displays a generally increasing trajectory, starting at 14,950 million US dollars in 2018 and rising to 22,237 million US dollars by the end of 2022. Although there is a slight dip in 2020 to 15,301 million, the overall movement reflects strong growth, particularly noticeable between 2021 and 2022.
The settlement obligations exhibit a somewhat volatile pattern during the same period. Initially, these obligations increase from 2,189 million US dollars in 2018 to 2,714 million in 2019, then experience a significant drop to 1,475 million in 2020, followed by a further decline to 913 million in 2021 before a slight recovery to 1,111 million in 2022. This non-linear behavior indicates fluctuations in the company's short-term liabilities related to settlements.
The payables turnover ratio shows substantial variation. Beginning at 6.83 in 2018, it decreases marginally to 6.22 in 2019, then sharply increases to 10.37 in 2020. This upward trend accelerates dramatically in 2021 and 2022, reaching values of 20.68 and 20.02 respectively. Such a marked rise suggests enhanced efficiency in managing payables, possibly due to improved operational processes or better negotiation of payment terms.
- Net Revenue
- Overall growth with a slight decline in 2020, followed by strong recovery and increase through 2022.
- Settlement Obligations
- Initial increase followed by significant decreases and a minor rebound, pointing to variability in short-term financial obligations.
- Payables Turnover Ratio
- Strong upward trend after 2019, indicating increased efficiency in paying creditors and managing liabilities.
Working Capital Turnover
Mastercard Inc., working capital turnover 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) | ||||||
| Current assets | ||||||
| Less: Current liabilities | ||||||
| Working capital | ||||||
| Net revenue | ||||||
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | ||||||
| Benchmarks | ||||||
| Working Capital Turnover, 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. | ||||||
| Working Capital Turnover, Sector | ||||||
| Software & Services | ||||||
| Working Capital Turnover, 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
Working capital turnover = Net revenue ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibits a fluctuating pattern over the period analyzed. Starting at 4,578 million USD at the end of 2018, it increased to 4,998 million USD in 2019, followed by a more significant rise to 7,266 million USD in 2020. However, there is a notable decline thereafter, with working capital dropping to 3,787 million USD in 2021 and further diminishing to 2,435 million USD in 2022. This suggests a reduction in liquid assets relative to current liabilities in the most recent years.
- Net Revenue
- Net revenue demonstrates an overall upward trend during the analyzed timeframe. Beginning at 14,950 million USD in 2018, net revenue increased to 16,883 million USD in 2019, then experienced a dip to 15,301 million USD in 2020. From 2020 onwards, revenue recovered and grew significantly, reaching 18,884 million USD in 2021 and further increasing to 22,237 million USD by the end of 2022. This growth reflects strong revenue performance after a temporary setback in 2020.
- Working Capital Turnover
- The working capital turnover ratio fluctuates across the periods, indicating variability in how efficiently the company utilizes its working capital to generate revenue. The ratio started at 3.27 in 2018 and slightly increased to 3.38 in 2019. It then dropped substantially to 2.11 in 2020, likely impacted by the working capital increase and revenue decrease in that year. A sharp rebound is observed in 2021 with a ratio of 4.99, followed by a significant surge to 9.13 in 2022, reflecting improved efficiency in using working capital concurrent with the decrease in working capital and rising net revenue.
Average Receivable Collection Period
Mastercard Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, 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. | ||||||
| Average Receivable Collection Period, Sector | ||||||
| Software & Services | ||||||
| Average Receivable Collection Period, 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
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the financial ratios over the five-year period reveals significant trends related to receivables management.
- Receivables Turnover
- The receivables turnover ratio demonstrates a consistent and substantial increase from 6.1 in 2018 to 17.51 in 2022. This indicates an improving efficiency in the collection of receivables, suggesting that the company is accelerating its ability to convert credit sales into cash over time.
- Average Receivable Collection Period
- Corresponding to the trend in the receivables turnover, the average receivable collection period shows a declining trajectory, moving from 60 days in 2018 down to 21 days in 2022. This reduction means that the company is successfully shortening the time customers take to pay their invoices, enhancing cash flow and reducing credit risk.
Overall, the patterns imply a strengthening in the company's receivables management practices, reflecting an enhanced ability to efficiently collect outstanding amounts within shorter durations. This trend positively impacts working capital turnover and operational liquidity.
Average Payables Payment Period
Mastercard Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, 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. | ||||||
| Average Payables Payment Period, Sector | ||||||
| Software & Services | ||||||
| Average Payables Payment Period, 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
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analyzed data reveals significant changes in the company's payables turnover and average payables payment period from 2018 to 2022. There is a clear upward trend in the payables turnover ratio over the five-year span, increasing from 6.83 in 2018 to a peak of 20.68 in 2021, followed by a slight decline to 20.02 in 2022.
This increase in payables turnover indicates that the company has been accelerating its rate of paying off suppliers. Correspondingly, the average payables payment period, which measures the average number of days the company takes to pay its suppliers, has notably decreased. It dropped from 53 days in 2018 to 18 days by 2021, maintaining that low level in 2022.
The inverse relationship between these two metrics is consistent with typical financial behavior; as payables turnover increases, it corresponds with a shorter payment period. The sharp rise in the turnover ratio coupled with the halving of the payment period since 2018 suggests a strategic shift towards faster settlement of payables, potentially improving supplier relationships or taking advantage of early payment discounts.
Overall, the data reflects a marked improvement in the efficiency with which payables are managed, with the company significantly reducing the time it takes to fulfill its payment obligations over the five years analyzed.