Intrinsic value of Mastercard - MA

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$124.01

  Intrinsic Value

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  Value-price divergence*

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$124.01

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 133.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.47
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
Revenue, $m
  10,776
  11,800
  12,868
  13,980
  15,138
  16,341
  17,593
  18,893
  20,244
  21,649
  23,109
  24,627
  26,206
  27,849
  29,560
  31,342
  33,200
  35,137
  37,157
  39,266
  41,468
  43,768
  46,172
  48,686
  51,314
  54,064
  56,942
  59,954
  63,109
  66,413
  69,874
Variable operating expenses, $m
 
  4,514
  4,907
  5,316
  5,742
  6,184
  6,645
  7,123
  7,620
  8,136
  8,673
  9,055
  9,636
  10,240
  10,869
  11,525
  12,208
  12,920
  13,663
  14,438
  15,248
  16,094
  16,978
  17,902
  18,868
  19,880
  20,938
  22,045
  23,205
  24,420
  25,693
Fixed operating expenses, $m
 
  920
  943
  967
  991
  1,016
  1,041
  1,067
  1,094
  1,121
  1,150
  1,178
  1,208
  1,238
  1,269
  1,301
  1,333
  1,366
  1,401
  1,436
  1,471
  1,508
  1,546
  1,585
  1,624
  1,665
  1,706
  1,749
  1,793
  1,838
  1,884
Total operating expenses, $m
  5,015
  5,434
  5,850
  6,283
  6,733
  7,200
  7,686
  8,190
  8,714
  9,257
  9,823
  10,233
  10,844
  11,478
  12,138
  12,826
  13,541
  14,286
  15,064
  15,874
  16,719
  17,602
  18,524
  19,487
  20,492
  21,545
  22,644
  23,794
  24,998
  26,258
  27,577
Operating income, $m
  5,761
  6,365
  7,017
  7,697
  8,405
  9,141
  9,907
  10,703
  11,531
  12,391
  13,286
  14,393
  15,362
  16,371
  17,422
  18,517
  19,659
  20,850
  22,094
  23,392
  24,749
  26,166
  27,649
  29,199
  30,821
  32,519
  34,298
  36,160
  38,111
  40,155
  42,298
EBITDA, $m
  6,134
  6,723
  7,392
  8,088
  8,814
  9,569
  10,354
  11,171
  12,019
  12,902
  13,819
  14,774
  15,767
  16,801
  17,879
  19,001
  20,172
  21,393
  22,668
  23,999
  25,389
  26,843
  28,362
  29,951
  31,614
  33,355
  35,178
  37,086
  39,086
  41,181
  43,378
Interest expense (income), $m
  74
  181
  82
  115
  148
  183
  220
  257
  297
  338
  380
  424
  470
  518
  568
  619
  673
  729
  788
  849
  913
  979
  1,049
  1,121
  1,197
  1,277
  1,360
  1,447
  1,538
  1,633
  1,733
Earnings before tax, $m
  5,646
  6,184
  6,935
  7,582
  8,256
  8,958
  9,687
  10,446
  11,234
  12,054
  12,906
  13,969
  14,892
  15,853
  16,854
  17,898
  18,986
  20,121
  21,306
  22,543
  23,836
  25,187
  26,600
  28,078
  29,624
  31,243
  32,938
  34,713
  36,573
  38,522
  40,564
Tax expense, $m
  1,587
  1,670
  1,872
  2,047
  2,229
  2,419
  2,616
  2,820
  3,033
  3,254
  3,485
  3,772
  4,021
  4,280
  4,551
  4,832
  5,126
  5,433
  5,753
  6,087
  6,436
  6,801
  7,182
  7,581
  7,998
  8,436
  8,893
  9,372
  9,875
  10,401
  10,952
Net income, $m
  4,059
  4,514
  5,062
  5,535
  6,027
  6,539
  7,072
  7,625
  8,201
  8,799
  9,422
  10,197
  10,871
  11,573
  12,304
  13,065
  13,860
  14,688
  15,553
  16,457
  17,400
  18,387
  19,418
  20,497
  21,625
  22,807
  24,044
  25,340
  26,698
  28,121
  29,612

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  8,335
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,675
  11,324
  12,349
  13,417
  14,527
  15,683
  16,884
  18,132
  19,428
  20,776
  22,177
  23,634
  25,149
  26,727
  28,369
  30,079
  31,862
  33,720
  35,660
  37,683
  39,797
  42,004
  44,311
  46,723
  49,246
  51,885
  54,647
  57,538
  60,565
  63,736
  67,058
Adjusted assets (=assets-cash), $m
  10,340
  11,324
  12,349
  13,417
  14,527
  15,683
  16,884
  18,132
  19,428
  20,776
  22,177
  23,634
  25,149
  26,727
  28,369
  30,079
  31,862
  33,720
  35,660
  37,683
  39,797
  42,004
  44,311
  46,723
  49,246
  51,885
  54,647
  57,538
  60,565
  63,736
  67,058
Revenue / Adjusted assets
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
Average production assets, $m
  1,467
  1,605
  1,750
  1,901
  2,059
  2,222
  2,393
  2,569
  2,753
  2,944
  3,143
  3,349
  3,564
  3,787
  4,020
  4,263
  4,515
  4,779
  5,053
  5,340
  5,640
  5,952
  6,279
  6,621
  6,979
  7,353
  7,744
  8,154
  8,583
  9,032
  9,503
Working capital, $m
  6,022
  -2,537
  -2,767
  -3,006
  -3,255
  -3,513
  -3,782
  -4,062
  -4,353
  -4,654
  -4,968
  -5,295
  -5,634
  -5,988
  -6,355
  -6,739
  -7,138
  -7,554
  -7,989
  -8,442
  -8,916
  -9,410
  -9,927
  -10,467
  -11,033
  -11,624
  -12,242
  -12,890
  -13,568
  -14,279
  -15,023
Total debt, $m
  5,180
  2,353
  3,275
  4,236
  5,236
  6,275
  7,356
  8,479
  9,647
  10,860
  12,120
  13,432
  14,796
  16,215
  17,693
  19,232
  20,837
  22,509
  24,255
  26,076
  27,978
  29,965
  32,041
  34,212
  36,482
  38,857
  41,343
  43,945
  46,670
  49,523
  52,513
Total liabilities, $m
  13,019
  10,192
  11,114
  12,075
  13,075
  14,114
  15,195
  16,318
  17,486
  18,699
  19,959
  21,271
  22,635
  24,054
  25,532
  27,071
  28,676
  30,348
  32,094
  33,915
  35,817
  37,804
  39,880
  42,051
  44,321
  46,696
  49,182
  51,784
  54,509
  57,362
  60,352
Total equity, $m
  5,656
  1,132
  1,235
  1,342
  1,453
  1,568
  1,688
  1,813
  1,943
  2,078
  2,218
  2,363
  2,515
  2,673
  2,837
  3,008
  3,186
  3,372
  3,566
  3,768
  3,980
  4,200
  4,431
  4,672
  4,925
  5,188
  5,465
  5,754
  6,057
  6,374
  6,706
Total liabilities and equity, $m
  18,675
  11,324
  12,349
  13,417
  14,528
  15,682
  16,883
  18,131
  19,429
  20,777
  22,177
  23,634
  25,150
  26,727
  28,369
  30,079
  31,862
  33,720
  35,660
  37,683
  39,797
  42,004
  44,311
  46,723
  49,246
  51,884
  54,647
  57,538
  60,566
  63,736
  67,058
Debt-to-equity ratio
  0.916
  2.080
  2.650
  3.160
  3.600
  4.000
  4.360
  4.680
  4.970
  5.230
  5.470
  5.680
  5.880
  6.070
  6.240
  6.390
  6.540
  6.680
  6.800
  6.920
  7.030
  7.130
  7.230
  7.320
  7.410
  7.490
  7.570
  7.640
  7.710
  7.770
  7.830
Adjusted equity ratio
  -0.259
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,059
  4,514
  5,062
  5,535
  6,027
  6,539
  7,072
  7,625
  8,201
  8,799
  9,422
  10,197
  10,871
  11,573
  12,304
  13,065
  13,860
  14,688
  15,553
  16,457
  17,400
  18,387
  19,418
  20,497
  21,625
  22,807
  24,044
  25,340
  26,698
  28,121
  29,612
Depreciation, amort., depletion, $m
  373
  358
  374
  392
  410
  428
  447
  468
  488
  510
  533
  381
  405
  430
  457
  484
  513
  543
  574
  607
  641
  676
  714
  752
  793
  836
  880
  927
  975
  1,026
  1,080
Funds from operations, $m
  3,617
  4,872
  5,437
  5,927
  6,437
  6,967
  7,519
  8,093
  8,689
  9,309
  9,954
  10,578
  11,276
  12,003
  12,760
  13,550
  14,373
  15,231
  16,128
  17,063
  18,041
  19,063
  20,131
  21,249
  22,419
  23,643
  24,924
  26,267
  27,673
  29,147
  30,692
Change in working capital, $m
  -867
  -220
  -230
  -239
  -249
  -259
  -269
  -280
  -291
  -302
  -314
  -326
  -340
  -353
  -368
  -383
  -399
  -416
  -434
  -453
  -473
  -495
  -517
  -540
  -565
  -591
  -619
  -648
  -678
  -710
  -744
Cash from operations, $m
  4,484
  5,081
  5,666
  6,166
  6,686
  7,226
  7,788
  8,372
  8,980
  9,611
  10,268
  10,904
  11,616
  12,356
  13,128
  13,933
  14,772
  15,648
  16,562
  17,517
  18,515
  19,558
  20,648
  21,789
  22,984
  24,234
  25,543
  26,915
  28,352
  29,857
  31,436
Maintenance CAPEX, $m
  0
  -167
  -182
  -199
  -216
  -234
  -253
  -272
  -292
  -313
  -335
  -357
  -381
  -405
  -430
  -457
  -484
  -513
  -543
  -574
  -607
  -641
  -676
  -714
  -752
  -793
  -836
  -880
  -927
  -975
  -1,026
New CAPEX, $m
  -382
  -138
  -145
  -151
  -157
  -164
  -170
  -177
  -184
  -191
  -199
  -206
  -215
  -223
  -233
  -242
  -253
  -263
  -275
  -287
  -299
  -313
  -327
  -342
  -357
  -374
  -391
  -410
  -429
  -449
  -471
Cash from investing activities, $m
  -1,167
  -305
  -327
  -350
  -373
  -398
  -423
  -449
  -476
  -504
  -534
  -563
  -596
  -628
  -663
  -699
  -737
  -776
  -818
  -861
  -906
  -954
  -1,003
  -1,056
  -1,109
  -1,167
  -1,227
  -1,290
  -1,356
  -1,424
  -1,497
Free cash flow, $m
  3,317
  4,776
  5,339
  5,816
  6,312
  6,828
  7,365
  7,924
  8,504
  9,107
  9,735
  10,341
  11,020
  11,728
  12,465
  13,234
  14,035
  14,871
  15,744
  16,656
  17,608
  18,604
  19,645
  20,734
  21,874
  23,067
  24,316
  25,625
  26,996
  28,433
  29,939
Issuance/(repayment) of debt, $m
  1,972
  -2,827
  922
  961
  1,000
  1,040
  1,081
  1,123
  1,167
  1,213
  1,261
  1,311
  1,364
  1,419
  1,478
  1,539
  1,604
  1,673
  1,745
  1,821
  1,902
  1,987
  2,076
  2,171
  2,270
  2,375
  2,486
  2,602
  2,725
  2,854
  2,990
Issuance/(repurchase) of shares, $m
  -3,474
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,456
  -2,827
  922
  961
  1,000
  1,040
  1,081
  1,123
  1,167
  1,213
  1,261
  1,311
  1,364
  1,419
  1,478
  1,539
  1,604
  1,673
  1,745
  1,821
  1,902
  1,987
  2,076
  2,171
  2,270
  2,375
  2,486
  2,602
  2,725
  2,854
  2,990
Total cash flow (excl. dividends), $m
  1,811
  1,948
  6,261
  6,776
  7,312
  7,868
  8,446
  9,047
  9,671
  10,320
  10,996
  11,652
  12,384
  13,147
  13,943
  14,773
  15,640
  16,544
  17,489
  18,477
  19,510
  20,591
  21,721
  22,905
  24,144
  25,442
  26,802
  28,227
  29,721
  31,287
  32,929
Retained Cash Flow (-), $m
  372
  -3,811
  -102
  -107
  -111
  -116
  -120
  -125
  -130
  -135
  -140
  -146
  -152
  -158
  -164
  -171
  -178
  -186
  -194
  -202
  -211
  -221
  -231
  -241
  -252
  -264
  -276
  -289
  -303
  -317
  -332
Prev. year cash balance distribution, $m
 
  8,335
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6,472
  6,159
  6,670
  7,201
  7,753
  8,326
  8,922
  9,541
  10,186
  10,856
  11,506
  12,233
  12,990
  13,779
  14,602
  15,461
  16,358
  17,295
  18,275
  19,299
  20,370
  21,491
  22,664
  23,892
  25,178
  26,526
  27,938
  29,418
  30,970
  32,596
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,205
  5,638
  5,804
  5,929
  6,009
  6,043
  6,028
  5,964
  5,851
  5,691
  5,464
  5,220
  4,939
  4,626
  4,287
  3,929
  3,559
  3,185
  2,814
  2,452
  2,107
  1,783
  1,485
  1,217
  979
  774
  600
  455
  338
  245
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers related products and services. The company also offers value-added services, such as loyalty and reward programs, information and consulting services, issuer and acquirer processing solutions, and payment and mobile gateways. In addition, it provides various payment products and solutions for cardholders, merchants, financial institutions, and governments; programs that enable issuers to provide consumers with cards to defer payments; payment products and solutions that allow its customers to access funds in deposit and other accounts; prepaid payment programs and management services; and commercial payment products and solutions. Further, the company provides products and services to prevent, detect, and respond to fraud and cyber-attacks, and ensure the safety of transactions. It offers payment solutions and services under the MasterCard, Maestro, and Cirrus brands. Mastercard Incorporated was founded in 1966 and is headquartered in Purchase, New York.

FINANCIAL RATIOS  of  Mastercard (MA)

Valuation Ratios
P/E Ratio 33
Price to Sales 12.4
Price to Book 23.7
Price to Tangible Book
Price to Cash Flow 29.9
Price to Free Cash Flow 32.7
Growth Rates
Sales Growth Rate 11.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.7%
Cap. Spend. - 3 Yr. Gr. Rate 5%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 91.6%
Total Debt to Equity 91.6%
Interest Coverage 77
Management Effectiveness
Return On Assets 23.5%
Ret/ On Assets - 3 Yr. Avg. 24.2%
Return On Total Capital 40.3%
Ret/ On T. Cap. - 3 Yr. Avg. 43.2%
Return On Equity 69.5%
Return On Equity - 3 Yr. Avg. 59.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 56.5%
EBITDA Margin - 3 Yr. Avg. 56.5%
Operating Margin 53.5%
Oper. Margin - 3 Yr. Avg. 53.4%
Pre-Tax Margin 52.4%
Pre-Tax Margin - 3 Yr. Avg. 52.5%
Net Profit Margin 37.7%
Net Profit Margin - 3 Yr. Avg. 38.5%
Effective Tax Rate 28.1%
Eff/ Tax Rate - 3 Yr. Avg. 26.7%
Payout Ratio 20.6%

MA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MA stock intrinsic value calculation we used $10776 million for the last fiscal year's total revenue generated by Mastercard. The default revenue input number comes from 2016 income statement of Mastercard. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MA stock valuation model: a) initial revenue growth rate of 9.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for MA is calculated based on our internal credit rating of Mastercard, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Mastercard.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MA stock the variable cost ratio is equal to 38.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $898 million in the base year in the intrinsic value calculation for MA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Mastercard.

Corporate tax rate of 27% is the nominal tax rate for Mastercard. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MA are equal to 13.6%.

Life of production assets of 8.8 years is the average useful life of capital assets used in Mastercard operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MA is equal to -21.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5656 million for Mastercard - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1076.84 million for Mastercard is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Mastercard at the current share price and the inputted number of shares is $133.5 billion.


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Stock chart of MA Financial statements of MA Annual reports of MA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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