Stock Analysis on Net
Stock Analysis on Net

Visa Inc. (NYSE:V)

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Economic Value Added (EVA)

Microsoft Excel LibreOffice Calc

Economic Profit

Visa Inc., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (filing date: 2020-11-19), 10-K (filing date: 2019-11-14), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-15).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Visa Inc.’s economic profit increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level.

Net Operating Profit after Taxes (NOPAT)

Visa Inc., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Net income
Deferred income tax expense (benefit)1
Increase (decrease) in equity equivalents2
Interest expense, net
Interest expense, operating lease liability3
Adjusted interest expense, net
Tax benefit of interest expense, net4
Adjusted interest expense, net, after taxes5
(Gain) loss on marketable securities
Investment income, before taxes
Tax expense (benefit) of investment income6
Investment income, after taxes7
Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2020-11-19), 10-K (filing date: 2019-11-14), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-15).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in equity equivalents to net income.

3 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

4 2020 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =

5 Addition of after taxes interest expense to net income.

6 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

7 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Visa Inc.’s NOPAT increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Cash Operating Taxes

Visa Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Income tax provision
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense, net
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (filing date: 2020-11-19), 10-K (filing date: 2019-11-14), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-15).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Visa Inc.’s cash operating taxes decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Invested Capital

Visa Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Current maturities of debt
Long-term debt, excluding current maturities
Operating lease liability1
Total reported debt & leases
Equity
Net deferred tax (assets) liabilities2
Equity equivalents3
Accumulated other comprehensive (income) loss, net of tax4
Adjusted equity
Construction-in-progress5
Investment securities6
Invested capital

Based on: 10-K (filing date: 2020-11-19), 10-K (filing date: 2019-11-14), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-15).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of equity equivalents to equity.

4 Removal of accumulated other comprehensive income.

5 Subtraction of construction-in-progress.

6 Subtraction of investment securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Visa Inc.’s invested capital increased from 2018 to 2019 and from 2019 to 2020.

Cost of Capital

Visa Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2020-11-19).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2019-11-14).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 25.00%) =
Operating lease liability4 ÷ = × × (1 – 25.00%) =
Total:

Based on: 10-K (filing date: 2018-11-16).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2017-11-17).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2016-11-15).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Visa Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Accenture PLC
Adobe Inc.
Autodesk Inc.
Automatic Data Processing Inc.
Fidelity National Information Services Inc.
Fiserv Inc.
International Business Machines Corp.
Intuit Inc.
Mastercard Inc.
Microsoft Corp.
Oracle Corp.
PayPal Holdings Inc.
salesforce.com inc.
ServiceNow Inc.

Based on: 10-K (filing date: 2020-11-19), 10-K (filing date: 2019-11-14), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-15).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Visa Inc.’s economic spread ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Economic Profit Margin

Visa Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Selected Financial Data (US$ in millions)
Economic profit1
Net revenues
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Accenture PLC
Adobe Inc.
Autodesk Inc.
Automatic Data Processing Inc.
Fidelity National Information Services Inc.
Fiserv Inc.
International Business Machines Corp.
Intuit Inc.
Mastercard Inc.
Microsoft Corp.
Oracle Corp.
PayPal Holdings Inc.
salesforce.com inc.
ServiceNow Inc.

Based on: 10-K (filing date: 2020-11-19), 10-K (filing date: 2019-11-14), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-15).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenues
= 100 × ÷ =

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Visa Inc.’s economic profit margin improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.