Introduction
In units 2 and 3 you worked on ratio calculations and received feedback on these assignments. In this unit, you will provide a brief written analysis of the ratios for Mastercard. Evaluation should be submitted in an MS Word document of no more than three pages and be concise, clear and professional.
This is an Individual Assignment
Directions
Evaluation of Mastercard should include:
A discussion of the ratios calculated in relation to the respective financial diagnostic categories (profitability, liquidity, leverage, operating returns).
Discuss the importance of the ratio in financial analysis.

Other information pertinent to Mastercard which could affect their future performance and stock price.
2013
2014
2015
FORMULA
PROFITABILITY RATIOS
PYPL GROSS MARGIN
65.26%
64.91%
63.03%
Gross Profit / Sales
PYPL OPERATION MARGIN
16.22%
15.80%
16.32%
Operating Income / Sales
PYPL NETPROFIT MARGIN
14.20%
5.22%
13.28%
Net Income / Sales
LIQUIDITY RATIO
PYPL CURRENT RATIO
1.30
1.32
1.52
Current Assets / Current Liabilities
PYPL CASH RATIO
0.14
0.17
0.10
Cash and Cash Equivalents / Current Liabilities
LEVERAGE RATIOS
PYPL DEBT TO EQUITY
1.59
1.66
1.10
Total Debt / Total Equity
OPERATION RETURNS
PYPL ROE
12.92%
5.08%
8.93%
Net Income / Shareholder’s Equity
PYPL ROA
4.98%
1.91%
4.25%
Net Income / Average Total Assets
alents / Current Liabilities
PYPL_income-statement_Annual_As_Originally_Reported
Gross Profit
Total Revenue
Business Revenue
Cost of Revenue
Cost of Goods and Services
Other Cost of Revenue
Operating Income/Expenses
Selling, General and Administrative Expenses
General and Administrative Expenses
Selling and Marketing Expenses
Research and Development Expenses
Depreciation, Amortization and Depletion
Depreciation and Amortization
Total Operating Profit/Loss
Non-Operating Income/Expenses, Total
Total Net Finance Income/Expense
Net Interest Income/Expense
Interest Expense Net of Capitalized Interest
Interest Income
Net Investment Income
Gain/Loss on Investments and Other Financial Instruments
Irregular Income/Expenses
Restructuring and Reorganization Income/Expense
Other Income/Expense, Non-Operating
Pretax Income
Provision for Income Tax
Net Income from Continuing Operations
Net Income after Extraordinary Items and Discontinued Operations
Net Income after Non-Controlling/Minority Interests
Net Income Available to Common Stockholders
Diluted Net Income Available to Common Stockholders
Total Revenue as Reported, Supplemental
Operating Expense as Reported, Supplemental
Total Operating Profit/Loss as Reported, Supplemental
Reported Effective Tax Rate
Reported Normalized Income
Reported Normalized Operating Profit
Basic EPS
Basic EPS from Continuing Operations
Diluted EPS
Diluted EPS from Continuing Operations
Basic Weighted Average Shares Outstanding
Diluted Weighted Average Shares Outstanding
Reported Normalized Diluted EPS
Basic EPS
Diluted EPS
Basic WASO
Diluted WASO
Fiscal year ends in Dec 31 | USD
2013
4,390,000,000
6,727,000,000
6,727,000,000
-2,337,000,000
-2,337,000,000
2014
5,209,000,000
8,025,000,000
8,025,000,000
-2,816,000,000
-2,816,000,000
-3,299,000,000
-2,119,000,000
-1,328,000,000
-791,000,000
-727,000,000
-453,000,000
-453,000,000
1,091,000,000
-7,000,000
-3,941,000,000
-2,535,000,000
-1,537,000,000
-998,000,000
-890,000,000
-516,000,000
-516,000,000
1,268,000,000
-7,000,000
0
0
-7,000,000
1,084,000,000
-129,000,000
955,000,000
955,000,000
955,000,000
955,000,000
955,000,000
6,727,000,000
-5,636,000,000
1,091,000,000
0.119
1,186,000,000
1,411,000,000
0
0
-7,000,000
1,261,000,000
-842,000,000
419,000,000
419,000,000
419,000,000
419,000,000
419,000,000
8,025,000,000
-6,757,000,000
1,268,000,000
0.67
1,343,000,000
1,648,000,000
0.31
0.31
0.31
0.31
1,251,000,000
1,262,000,000
1.10
0.31
0.31
1,251,000,000
1,262,000,000
2015
5,829,000,000
9,248,000,000
9,248,000,000
-3,419,000,000
-3,419,000,000
-4,320,000,000
-2,765,000,000
-1,780,000,000
-985,000,000
-947,000,000
-608,000,000
-608,000,000
1,509,000,000
-21,000,000
-48,000,000
-48,000,000
27,000,000
1,488,000,000
-260,000,000
1,228,000,000
1,228,000,000
1,228,000,000
1,228,000,000
1,228,000,000
9,248,000,000
-7,787,000,000
1,461,000,000
0.175
1,588,000,000
1,975,000,000
1.00
1.00
1.00
1.00
1,222,000,000
1,229,000,000
1.29
1.00
1.00
1,222,000,000
1,229,000,000
PYPL_balance-sheet_Annual_As_Originally_Reported
Total Assets
Total Current Assets
Cash, Cash Equivalents and Short Term Investments
Cash and Cash Equivalents
Short Term Investments
Trade and Other Receivables, Current
Trade/Accounts Receivable, Current
Loans Receivable, Current
Notes Receivable, Current
Prepayments and Deposits, Current
Other Current Assets
Total Non-Current Assets
Net Property, Plant and Equipment
Gross Property, Plant and Equipment
Properties
Land and Improvements
Leasehold and Improvements
Buildings and Improvements
Machinery, Furniture and Equipment
Furniture, Fixtures and Office Equipment
Construction in Progress and Advance Payments
Accumulated Depreciation and Impairment
Accumulated Depreciation
Net Intangible Assets
Gross Goodwill and Other Intangible Assets
Goodwill
Intangibles other than Goodwill
Software and Technology
Other Intangible Assets
Accumulated Amortization and Impairment
Accumulated Amortization of Intangible Assets
Accumulated Amortization of Intangibles other than Goodwill
Accumulated Amortization of Software and Technology
Accumulated Amortization of Other Intangible Assets
Total Long Term Investments
Other Non-Current Assets
Total Liabilities
Total Current Liabilities
Payables and Accrued Expenses, Current
Trade and Other Payables, Current
Trade/Accounts Payable, Current
Taxes Payable, Current
Accrued Expenses, Current
Financial Liabilities, Current
Current Debt and Capital Lease Obligation
Current Debt
Notes Payable, Current Debt
Total Non-Current Liabilities
Financial Liabilities, Non-Current
Long Term Debt and Capital Lease Obligation
Long Term Debt
Tax Liabilities, Non-Current
Deferred Tax Liabilities, Non-Current
Total Equity
Equity Attributable to Parent Stockholders
2013
19,160,000,000
14,620,000,000
1,925,000,000
1,604,000,000
321,000,000
12,428,000,000
9,329,000,000
2,789,000,000
310,000,000
2014
21,917,000,000
17,565,000,000
2,230,000,000
2,201,000,000
29,000,000
14,957,000,000
10,677,000,000
3,586,000,000
694,000,000
2015
28,881,000,000
20,648,000,000
3,411,000,000
1,393,000,000
2,018,000,000
16,582,000,000
12,398,000,000
4,184,000,000
0
655,000,000
267,000,000
4,540,000,000
858,000,000
2,403,000,000
328,000,000
162,000,000
166,000,000
378,000,000
4,352,000,000
922,000,000
2,862,000,000
348,000,000
162,000,000
186,000,000
1,983,000,000
1,983,000,000
92,000,000
-1,545,000,000
-1,545,000,000
3,445,000,000
4,185,000,000
3,187,000,000
998,000,000
169,000,000
829,000,000
-740,000,000
-740,000,000
-740,000,000
-136,000,000
-604,000,000
196,000,000
41,000,000
11,770,000,000
11,261,000,000
10,158,000,000
9,387,000,000
9,350,000,000
37,000,000
771,000,000
1,103,000,000
1,103,000,000
1,103,000,000
1,103,000,000
509,000,000
509,000,000
509,000,000
509,000,000
2,350,000,000
2,350,000,000
164,000,000
-1,940,000,000
-1,940,000,000
3,345,000,000
4,162,000,000
3,189,000,000
973,000,000
167,000,000
806,000,000
-817,000,000
-817,000,000
-817,000,000
-153,000,000
-664,000,000
31,000,000
54,000,000
13,669,000,000
13,283,000,000
12,190,000,000
10,756,000,000
10,727,000,000
29,000,000
1,434,000,000
1,093,000,000
1,093,000,000
1,093,000,000
1,093,000,000
386,000,000
386,000,000
386,000,000
386,000,000
7,390,000,000
7,390,000,000
1,505,000,000
1,505,000,000
8,248,000,000 13,759,000,000
8,248,000,000 13,759,000,000
8,233,000,000
1,344,000,000
3,849,000,000
649,000,000
352,000,000
297,000,000
3,067,000,000
3,067,000,000
133,000,000
-2,505,000,000
-2,505,000,000
4,427,000,000
5,359,000,000
4,069,000,000
1,290,000,000
245,000,000
1,045,000,000
-932,000,000
-932,000,000
-932,000,000
-176,000,000
-756,000,000
2,348,000,000
114,000,000
15,122,000,000
13,617,000,000
13,617,000,000
12,438,000,000
12,406,000,000
32,000,000
1,179,000,000
0
0
0
0
1,505,000,000
Paid in Capital
Capital Stock
Common Stock
Preferred Stock
Additional Paid in Capital/Share Premium
Treasury Stock
Retained Earnings/Accumulated Deficit
Reserves/Accumulated Comprehensive Income/Losses
Other Equity Interest
Non-Controlling/Minority Interests
Debt Maturity Schedule Total
Debt due in Year 1
Debt due in Year 2
Debt due in Year 3
Debt due in Year 4
Debt due in Year 5
Debt due Beyond
Debt – Interests Charges and Other Adjustments
Operating Lease Obligation Maturity Schedule Total
Operating Lease due in Year 1
Operating Lease due in Year 2
Operating Lease due in Year 3
Operating Lease due in Year 4
Operating Lease due in Year 5
Operating Lease due Beyond
Operating Lease – Interests Charges and Other Adjustments
Other Contractual Obligations Maturity Schedule Total
Other Contractual Obligations due in Year 1
Other Contractual Obligations due in Year 2
Other Contractual Obligations due in Year 3
Other Contractual Obligations due in Year 4
Other Contractual Obligations due in Year 5
Other Contractual Obligations due Beyond
Total Lease Liability
Total Lease Liability ?C Due in year 1
Total Lease Liability ?C Due in year 2
Total Lease Liability ?C Due in year 3
Total Lease Liability ?C Due in year 4
Total Lease Liability ?C Due in year 5
Total Lease Liability ?C Beyond
Total Lease Liability ?C Interest Charges and Other Adjustments
Total Contractual Obligations
Total Contractual Obligations due in year 1
Total Contractual Obligations due in year 2
Total Contractual Obligations due in year 3
Total Contractual Obligations due in year 4
Total Contractual Obligations due in year 5
Total Contractual Obligations due Beyond
Total Contractual Obligations – Interests Charges and Other Adjustments
Fiscal year ends in Dec 31 | USD
13,100,000,000
13,100,000,000
0
13,100,000,000
-61,000,000
7,451,000,000
110,000,000
8,138,000,000
668,000,000
-9,000,000
0
PYPL_cash-flow_Annual_As_Originally_Reported
Cash Flow from Operating Activities, Indirect
Net Cash Flow from Continuing Operating Activities, Indirect
Cash Generated from Operating Activities
Income/Loss before Non-Cash Adjustment
Total Adjustments for Non-Cash Items
Depreciation, Amortization and Depletion, Non-Cash Adjustment
Depreciation and Amortization, Non-Cash Adjustment
Stock-Based Compensation, Non-Cash Adjustment
Taxes, Non-Cash Adjustment
Other Provisions, Non-Cash Adjustment
Net Investment Income/Loss, Non-Cash Adjustment
Gain/Loss on Financial Instruments, Non-Cash Adjustment
Unrealized Gain/Loss on Financial Instruments, Non-Cash Adjustment
Other Non-Cash Items
Excess Tax Benefit from Stock-Based Compensation, Non-Cash Adjustment
Irregular Income/Loss, Non-Cash Adjustment
Gain/Loss on Disposals, Non-Cash Adjustment
Gain/Loss on Disposal/Sale of Other Assets, Non-Cash Adjustment
Changes in Operating Capital
Change in Trade and Other Receivables
Change in Trade/Accounts Receivable
Change in Loans Receivable
Change in Other Receivables
Change in Notes Receivable
Change in Other Current Assets
Change in Payables and Accrued Expenses
Change in Trade and Other Payables
Change in Trade/Accounts Payable
Change in Taxes Payable
Change in Other Payables
Change in Trade Notes Payable
Change in Accrued Expenses
Change in Other Current Liabilities
Change in Other Operating Capital
Cash Flow from Investing Activities
Cash Flow from Continuing Investing Activities
Payment for Loan Granted and Repayments Received, Net
Purchase/Sale and Disposal of Property, Plant and Equipment, Net
Purchase of Property, Plant and Equipment
Sale and Disposal of Property, Plant and Equipment
Purchase/Sale of Business, Net
Purchase/Acquisition of Business
Purchase/Sale of Investments, Net
Purchase of Investments
Sale of Investments
Purchase/Sale of Other Non-Current Assets, Net
Other Investing Cash Flow
Cash Flow from Financing Activities
Cash Flow from Continuing Financing Activities
Issuance of/Payments for Common Stock, Net
Proceeds from Issuance of Common Stock
Payments for Common Stock
Issuance of/Repayments for Debt, Net
Issuance of/Repayments for Long Term Debt, Net
Proceeds from Issuance of Long Term Debt
Repayments for Long Term Debt
Issuance of/Repayments for Short Term Debt, Net
Repayments for Short Term Debt
Other Financing Cash Flow
Excess Tax Benefit from Share-Based Compensation, Financing Activities
Net Movement in Non-Controlling/Minority Interest
Cash and Cash Equivalents, End of Period
Change in Cash
Effect of Exchange Rate Changes
Cash and Cash Equivalents, Beginning of Period
Change in Cash as Reported, Supplemental
Income Tax Paid, Supplemental
Interest Paid, Supplemental
Fiscal year ends in Dec 31 | USD
2013
1,993,000,000
1,993,000,000
1,993,000,000
955,000,000
1,184,000,000
453,000,000
453,000,000
253,000,000
52,000,000
502,000,000
2014
2,220,000,000
2,220,000,000
2,220,000,000
419,000,000
2,100,000,000
516,000,000
516,000,000
299,000,000
680,000,000
646,000,000
2015
2,546,000,000
2,546,000,000
2,546,000,000
1,228,000,000
1,824,000,000
608,000,000
608,000,000
346,000,000
127,000,000
809,000,000
-76,000,000
0
0
0
-146,000,000
80,000,000
1,000,000
0
79,000,000
-41,000,000
-26,000,000
-40,000,000
-40,000,000
-40,000,000
-506,000,000
113,000,000
-22,000,000
14,000,000
121,000,000
-299,000,000
-37,000,000
-13,000,000
-24,000,000
-62,000,000
71,000,000
71,000,000
-13,000,000
41,000,000
43,000,000
-223,000,000
77,000,000
42,000,000
37,000,000
-384,000,000
-165,000,000
-165,000,000
12,000,000
40,000,000
-217,000,000
-2,000,000
-300,000,000
69,000,000
-304,000,000
-1,721,000,000
-1,721,000,000
-793,000,000
-391,000,000
-391,000,000
0
-731,000,000
-731,000,000
-290,000,000
-610,000,000
320,000,000
-39,000,000
-1,546,000,000
-1,546,000,000
-1,023,000,000
-492,000,000
-492,000,000
-2,000,000
-2,000,000
333,000,000
-76,000,000
409,000,000
423,000,000
-493,000,000
-6,389,000,000
-6,389,000,000
-819,000,000
-696,000,000
-722,000,000
26,000,000
-1,225,000,000
-1,225,000,000
-4,224,000,000
-7,542,000,000
3,318,000,000
484,000,000
-85,000,000
-85,000,000
0
0
-362,000,000
-51,000,000
-51,000,000
575,000,000
3,079,000,000
3,079,000,000
75,000,000
75,000,000
-133,000,000
-21,000,000
-21,000,000
-862,000,000
-133,000,000
-133,000,000
0
76,000,000
-28,000,000
1,604,000,000
187,000,000
3,000,000
1,414,000,000
190,000,000
-28,000,000
-14,000,000
0
41,000,000
-71,000,000
2,201,000,000
623,000,000
-26,000,000
1,604,000,000
597,000,000
-47,000,000
-19,000,000
-862,000,000
-862,000,000
-18,000,000
26,000,000
3,858,000,000
1,393,000,000
-764,000,000
-44,000,000
2,201,000,000
-808,000,000
-216,000,000
-16,000,000
1
Mastercard Financial Ratios
Ashley Denson
Park University
MBA 615
Naseem Al Rahahleh
September 18, 2022
2
Mastercard Financial Ratios
Profitability Ratio
Profitability ratios are financial measures that assess the ability of a business to earn
profits from its resources. The ratios indicate the level of a firm’s efficiency in generating value
and profits for its shareholders. Usually, higher profitability ratios are considered favorable for
company. However, it is necessary to compare those ratios with the company’s previous
performance or the average performance of other companies in the industry. Gross margin,
operation margin, and net profit margin are some of the profitability ratios used.
The gross margin ratio compares a firm’s gross margin with its revenue. It shows the
level of profits accrued to a company after accounting for the cost of goods sold (COGS). It
essentially indicates the fraction of revenue retained by a company as gross profit. In the years
2017, 2018, and 2019, Mastercard gross margin ratio was 78.50%, 78.50%, and 79.05%
respectively. The high gross margin ratio and the upward trend observed in 2019 shows that
Mastercard will continue to have the capacity to pay debts, interests, expenses, and dividends. It
also indicates a slight improvement sales efficiency.
Operating margin ratio is a profitability ratio that indicates the fraction of revenue that is
left after paying the COGS and the operating expenses. It compares the operating income to the
revenue. During the 2017-2019 period, Mastercard’s operating margin ratio was 53.96%, 56.01%
and 57.43% respectively. There has been a consistent improvement in operating margin. This
shows a consistent improvement in the level of efficiency in Mastercard’s core operations.
The net profit margin ratio is a measure of a firm’s ability to yield earnings after paying
all expenses and taxes. It compares the net income earned by the firm to the sales. Between 2017
and 2019, Mastercard’s net profit margin ratio was 31.33%, 39.19%, and 48.08%. This is a
3
significant increase in net profit margin over the three years. It shows a significant increase in
efficiency in Mastercard’s ability to convert revenue to actual profit.
Liquidity Ratio
Liquidity ratios are financial metrics that measures a firm’s ability to meet its short-term
obligation. It shows the capacity of a company to use its current assets to pay current liabilities.
Liquidity ratio is considered good if it is higher than one. Some of the liquidity ratios include
current ratio and cash ratio.
Current ratio is a liquidity ratio that indicates a firm’s capacity to pay obligations that are
short-term or due in less than one year. It is a comparison of current assets to current liabilities.
In the 2017-2019 period, Mastercard had a current ratio of 1.57, 1.39, and 1.42 respectively. The
current ratio dropped significantly in 2018 but improved slightly in 2019. This shows that in
2018, there is a significant increase in current liabilities. Generally, Mastercard can meet its
short-term obligation due in a year using its current assets.
Cash ratio is a measure of liquidity that shows a company’s ability to meet its short-term
obligation using cash and cash equivalents. It compares the cash and cash equivalents to the current
liabilities. In the 2017 to 2019, Mastercard’s cash ratio was 0.67, 0.58, and 0.59. Just like the
current ratio, there was a significant drop in 2018 and slight improvement in the following year. It
is an indicator that there was a significant increase in liabilities in 2018. The less than 1 cash ratio
shows that in a worst-case scenario, Mastercard cannot be able to pay off its current liabilities
using cash and near-cash assets.
Leverage Ratio
Leverage ratios are financial measures of a firm’s debt level relative to its capital.
Leverage ratio is essentially a measure of a company’s ability to meet its financial obligation.
4
Debt-to-equity ratio is a leverage ratio that compares the total liabilities of a company to
shareholder’s equity. The debt-to-equity ratio shows the degree to which a company is reliant on
debt. Mastercard’s debt-to-equity ratio increased from 2.88 to 3.59, then 3.94 in the years 2017,
2018, and 2019. In 2018, increase in the ratio was very significant as compared to 2019. This is
an indication that Mastercard increased its debt significantly in 2018. Considering the increase in
net income during this period, it can be said that Mastercard utilized its debt financing to grow.
At the same time, the increase in debt-to-equity ratio indicates an increase in risk to investors and
lenders since the company’s potential growth is financed through debt.
Operation Returns
Return on equity (ROE) ratio is a financial metric that indicates the profitability of a
company relative to shareholder’s equity. It shows how efficient a company is at generating
profits from equity financing. In the 2017-2019 period, Mastercard’s ROE ratio was 71.22%,
108.14%, and 137.20% consecutively. This shows a significant increase in profitability of the
company.
Return on assets ratio is a financial measure that compares the profitably of a company to
its total assets. A higher return on assets shows that the management is more efficient in utilizing
the company’s assets in generating profits. In 2017, 2018, and 2019, Mastercard return on assets
ratio was 18.36%, 23.57%, and 27.77% respectively. This shows a steady gradual improvement
in the company’s utilization assets to generate profits.

Purchase answer to see full
attachment