Intrinsic value of Mastercard - MA

Previous Close

$203.88

  Intrinsic Value

$158.60

stock screener

  Rating & Target

sell

-22%

Previous close

$203.88

 
Intrinsic value

$158.60

 
Up/down potential

-22%

 
Rating

sell

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 2017), $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 217.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.00
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
Revenue, $m
  14,497
  16,657
  18,973
  21,444
  24,063
  26,830
  29,739
  32,791
  35,983
  39,316
  42,790
  46,406
  50,168
  54,079
  58,144
  62,368
  66,758
  71,321
  76,064
  80,998
  86,131
  91,474
  97,039
  102,837
  108,881
  115,185
  121,762
  128,629
  135,801
  143,295
Variable operating expenses, $m
  6,674
  7,607
  8,607
  9,674
  10,805
  11,999
  13,256
  14,573
  15,951
  17,390
  18,475
  20,036
  21,660
  23,349
  25,104
  26,928
  28,823
  30,793
  32,841
  34,971
  37,187
  39,494
  41,897
  44,400
  47,009
  49,731
  52,571
  55,536
  58,632
  61,868
Fixed operating expenses, $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
Total operating expenses, $m
  6,674
  7,607
  8,607
  9,674
  10,805
  11,999
  13,256
  14,573
  15,951
  17,390
  18,475
  20,036
  21,660
  23,349
  25,104
  26,928
  28,823
  30,793
  32,841
  34,971
  37,187
  39,494
  41,897
  44,400
  47,009
  49,731
  52,571
  55,536
  58,632
  61,868
Operating income, $m
  7,822
  9,050
  10,366
  11,770
  13,258
  14,830
  16,484
  18,218
  20,032
  21,926
  24,315
  26,370
  28,508
  30,731
  33,040
  35,441
  37,935
  40,528
  43,223
  46,027
  48,944
  51,980
  55,142
  58,437
  61,871
  65,453
  69,191
  73,093
  77,169
  81,427
EBITDA, $m
  8,713
  10,011
  11,404
  12,889
  14,463
  16,126
  17,875
  19,709
  21,628
  23,631
  25,719
  27,892
  30,154
  32,504
  34,948
  37,486
  40,125
  42,867
  45,718
  48,683
  51,769
  54,980
  58,325
  61,810
  65,442
  69,231
  73,185
  77,312
  81,623
  86,127
Interest expense (income), $m
  74
  293
  430
  578
  736
  906
  1,085
  1,274
  1,474
  1,683
  1,902
  2,130
  2,368
  2,616
  2,873
  3,141
  3,420
  3,709
  4,010
  4,323
  4,648
  4,986
  5,337
  5,703
  6,085
  6,482
  6,896
  7,328
  7,778
  8,249
  8,740
Earnings before tax, $m
  7,529
  8,620
  9,789
  11,033
  12,353
  13,745
  15,209
  16,744
  18,349
  20,024
  22,185
  24,002
  25,892
  27,857
  29,899
  32,021
  34,226
  36,518
  38,901
  41,379
  43,958
  46,643
  49,439
  52,352
  55,389
  58,558
  61,864
  65,315
  68,920
  72,687
Tax expense, $m
  2,033
  2,327
  2,643
  2,979
  3,335
  3,711
  4,107
  4,521
  4,954
  5,407
  5,990
  6,481
  6,991
  7,521
  8,073
  8,646
  9,241
  9,860
  10,503
  11,172
  11,869
  12,594
  13,348
  14,135
  14,955
  15,811
  16,703
  17,635
  18,608
  19,625
Net income, $m
  5,496
  6,293
  7,146
  8,054
  9,018
  10,034
  11,103
  12,223
  13,395
  14,618
  16,195
  17,522
  18,901
  20,336
  21,826
  23,375
  24,985
  26,658
  28,398
  30,207
  32,089
  34,049
  36,090
  38,217
  40,434
  42,747
  45,160
  47,680
  50,312
  53,061

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  24,654
  28,327
  32,268
  36,469
  40,924
  45,628
  50,577
  55,767
  61,196
  66,864
  72,772
  78,922
  85,320
  91,972
  98,885
  106,069
  113,534
  121,294
  129,361
  137,751
  146,481
  155,568
  165,032
  174,892
  185,171
  195,892
  207,079
  218,757
  230,955
  243,699
Adjusted assets (=assets-cash), $m
  24,654
  28,327
  32,268
  36,469
  40,924
  45,628
  50,577
  55,767
  61,196
  66,864
  72,772
  78,922
  85,320
  91,972
  98,885
  106,069
  113,534
  121,294
  129,361
  137,751
  146,481
  155,568
  165,032
  174,892
  185,171
  195,892
  207,079
  218,757
  230,955
  243,699
Revenue / Adjusted assets
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
Average production assets, $m
  4,755
  5,463
  6,223
  7,033
  7,893
  8,800
  9,755
  10,755
  11,803
  12,896
  14,035
  15,221
  16,455
  17,738
  19,071
  20,457
  21,897
  23,393
  24,949
  26,567
  28,251
  30,003
  31,829
  33,730
  35,713
  37,781
  39,938
  42,190
  44,543
  47,001
Working capital, $m
  -1,087
  -1,249
  -1,423
  -1,608
  -1,805
  -2,012
  -2,230
  -2,459
  -2,699
  -2,949
  -3,209
  -3,480
  -3,763
  -4,056
  -4,361
  -4,678
  -5,007
  -5,349
  -5,705
  -6,075
  -6,460
  -6,861
  -7,278
  -7,713
  -8,166
  -8,639
  -9,132
  -9,647
  -10,185
  -10,747
Total debt, $m
  7,955
  10,695
  13,635
  16,769
  20,092
  23,602
  27,294
  31,165
  35,215
  39,443
  43,851
  48,439
  53,212
  58,174
  63,331
  68,690
  74,259
  80,048
  86,066
  92,325
  98,838
  105,617
  112,677
  120,032
  127,701
  135,698
  144,044
  152,756
  161,855
  171,362
Total liabilities, $m
  18,392
  21,132
  24,072
  27,206
  30,529
  34,039
  37,731
  41,602
  45,652
  49,880
  54,288
  58,876
  63,649
  68,611
  73,768
  79,127
  84,696
  90,485
  96,503
  102,762
  109,275
  116,054
  123,114
  130,469
  138,138
  146,135
  154,481
  163,193
  172,292
  181,799
Total equity, $m
  6,262
  7,195
  8,196
  9,263
  10,395
  11,590
  12,847
  14,165
  15,544
  16,983
  18,484
  20,046
  21,671
  23,361
  25,117
  26,941
  28,838
  30,809
  32,858
  34,989
  37,206
  39,514
  41,918
  44,423
  47,033
  49,757
  52,598
  55,564
  58,662
  61,900
Total liabilities and equity, $m
  24,654
  28,327
  32,268
  36,469
  40,924
  45,629
  50,578
  55,767
  61,196
  66,863
  72,772
  78,922
  85,320
  91,972
  98,885
  106,068
  113,534
  121,294
  129,361
  137,751
  146,481
  155,568
  165,032
  174,892
  185,171
  195,892
  207,079
  218,757
  230,954
  243,699
Debt-to-equity ratio
  1.270
  1.490
  1.660
  1.810
  1.930
  2.040
  2.120
  2.200
  2.270
  2.320
  2.370
  2.420
  2.460
  2.490
  2.520
  2.550
  2.580
  2.600
  2.620
  2.640
  2.660
  2.670
  2.690
  2.700
  2.720
  2.730
  2.740
  2.750
  2.760
  2.770
Adjusted equity ratio
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,496
  6,293
  7,146
  8,054
  9,018
  10,034
  11,103
  12,223
  13,395
  14,618
  16,195
  17,522
  18,901
  20,336
  21,826
  23,375
  24,985
  26,658
  28,398
  30,207
  32,089
  34,049
  36,090
  38,217
  40,434
  42,747
  45,160
  47,680
  50,312
  53,061
Depreciation, amort., depletion, $m
  891
  962
  1,038
  1,119
  1,205
  1,296
  1,391
  1,491
  1,596
  1,705
  1,404
  1,522
  1,646
  1,774
  1,907
  2,046
  2,190
  2,339
  2,495
  2,657
  2,825
  3,000
  3,183
  3,373
  3,571
  3,778
  3,994
  4,219
  4,454
  4,700
Funds from operations, $m
  6,387
  7,254
  8,183
  9,173
  10,222
  11,330
  12,494
  13,714
  14,991
  16,323
  17,599
  19,044
  20,547
  22,109
  23,733
  25,421
  27,175
  28,997
  30,892
  32,864
  34,914
  37,049
  39,273
  41,590
  44,006
  46,525
  49,154
  51,899
  54,766
  57,762
Change in working capital, $m
  -150
  -162
  -174
  -185
  -196
  -207
  -218
  -229
  -239
  -250
  -261
  -271
  -282
  -293
  -305
  -317
  -329
  -342
  -356
  -370
  -385
  -401
  -417
  -435
  -453
  -473
  -493
  -515
  -538
  -562
Cash from operations, $m
  6,537
  7,416
  8,357
  9,359
  10,419
  11,537
  12,712
  13,943
  15,230
  16,573
  17,859
  19,315
  20,829
  22,403
  24,038
  25,738
  27,504
  29,339
  31,248
  33,234
  35,299
  37,450
  39,690
  42,025
  44,459
  46,998
  49,648
  52,414
  55,304
  58,324
Maintenance CAPEX, $m
  -410
  -475
  -546
  -622
  -703
  -789
  -880
  -975
  -1,076
  -1,180
  -1,290
  -1,404
  -1,522
  -1,646
  -1,774
  -1,907
  -2,046
  -2,190
  -2,339
  -2,495
  -2,657
  -2,825
  -3,000
  -3,183
  -3,373
  -3,571
  -3,778
  -3,994
  -4,219
  -4,454
New CAPEX, $m
  -657
  -708
  -760
  -810
  -859
  -907
  -954
  -1,001
  -1,047
  -1,093
  -1,139
  -1,186
  -1,234
  -1,283
  -1,333
  -1,385
  -1,440
  -1,497
  -1,556
  -1,618
  -1,684
  -1,753
  -1,825
  -1,902
  -1,982
  -2,068
  -2,158
  -2,252
  -2,352
  -2,458
Cash from investing activities, $m
  -1,067
  -1,183
  -1,306
  -1,432
  -1,562
  -1,696
  -1,834
  -1,976
  -2,123
  -2,273
  -2,429
  -2,590
  -2,756
  -2,929
  -3,107
  -3,292
  -3,486
  -3,687
  -3,895
  -4,113
  -4,341
  -4,578
  -4,825
  -5,085
  -5,355
  -5,639
  -5,936
  -6,246
  -6,571
  -6,912
Free cash flow, $m
  5,470
  6,232
  7,051
  7,926
  8,856
  9,840
  10,878
  11,967
  13,107
  14,299
  15,430
  16,725
  18,073
  19,474
  20,931
  22,445
  24,018
  25,653
  27,353
  29,120
  30,959
  32,873
  34,865
  36,940
  39,103
  41,359
  43,712
  46,168
  48,732
  51,411
Issuance/(repayment) of debt, $m
  2,531
  2,740
  2,939
  3,134
  3,324
  3,509
  3,692
  3,872
  4,050
  4,228
  4,407
  4,588
  4,773
  4,962
  5,157
  5,359
  5,569
  5,789
  6,018
  6,259
  6,512
  6,779
  7,060
  7,356
  7,668
  7,998
  8,345
  8,712
  9,099
  9,507
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  2,531
  2,740
  2,939
  3,134
  3,324
  3,509
  3,692
  3,872
  4,050
  4,228
  4,407
  4,588
  4,773
  4,962
  5,157
  5,359
  5,569
  5,789
  6,018
  6,259
  6,512
  6,779
  7,060
  7,356
  7,668
  7,998
  8,345
  8,712
  9,099
  9,507
Total cash flow (excl. dividends), $m
  8,001
  8,973
  9,990
  11,060
  12,180
  13,350
  14,569
  15,838
  17,157
  18,527
  19,837
  21,314
  22,846
  24,437
  26,088
  27,804
  29,587
  31,442
  33,371
  35,380
  37,471
  39,652
  41,925
  44,296
  46,772
  49,357
  52,057
  54,880
  57,831
  60,919
Retained Cash Flow (-), $m
  -868
  -933
  -1,001
  -1,067
  -1,132
  -1,195
  -1,257
  -1,318
  -1,379
  -1,440
  -1,501
  -1,562
  -1,625
  -1,690
  -1,756
  -1,825
  -1,896
  -1,971
  -2,049
  -2,131
  -2,217
  -2,308
  -2,404
  -2,505
  -2,611
  -2,723
  -2,841
  -2,966
  -3,098
  -3,237
Prev. year cash balance distribution, $m
  74
  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
  175
  203
  233
  266
  300
  337
  376
  416
  459
  504
  550
  599
  650
  702
  757
  814
  873
  935
  998
  1,065
  1,134
  1,206
  1,281
  1,359
  1,440
  1,524
  1,613
  1,705
  1,801
  1,901
Cash available for distribution, $m
  7,207
  8,040
  8,990
  9,993
  11,048
  12,155
  13,312
  14,520
  15,778
  17,088
  18,337
  19,751
  21,221
  22,747
  24,332
  25,979
  27,691
  29,471
  31,322
  33,248
  35,254
  37,343
  39,521
  41,792
  44,161
  46,634
  49,216
  51,914
  54,733
  57,682
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
  6,910
  7,360
  7,823
  8,228
  8,564
  8,821
  8,994
  9,075
  9,064
  8,958
  8,708
  8,429
  8,069
  7,637
  7,144
  6,602
  6,025
  5,427
  4,823
  4,225
  3,646
  3,099
  2,590
  2,129
  1,718
  1,361
  1,056
  803
  597
  434
Current shareholders' claim on cash, %
  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 is a technology company that connects consumers, financial institutions, merchants, governments and businesses across the world, enabling them to use electronic forms of payment. The Company operates through Payment Solutions segment. The Company allows user to make payments by creating a range of payment solutions and services using its brands, which include MasterCard, Maestro and Cirrus. The Company provides a range of products and solutions that support payment products, which customers can offer to their cardholders. The Company's services facilitate transactions on its network among cardholders, merchants, financial institutions and governments. The Company's products include consumer credit and charge, commercial, debit, prepaid, commercial and digital. The Company's consumer credit and charge offers a range of programs that enables issuers to provide consumers with cards allowing users to defer payment.

FINANCIAL RATIOS  of  Mastercard (MA)

Valuation Ratios
P/E Ratio 54.3
Price to Sales 20.5
Price to Book 39
Price to Tangible Book
Price to Cash Flow 49.2
Price to Free Cash Flow 53.7
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 $12497 million for the last fiscal year's total revenue generated by Mastercard. The default revenue input number comes from 2017 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 16% 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 46.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% 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 1.4%.

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 32.8%.

Life of production assets of 10 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 -7.5%. 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 - $5468 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 1067 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 $217.5 billion.

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COMPANY NEWS

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▶ Mastercard to Participate in Upcoming Investor Conference   [Aug-03-18 04:30PM  Business Wire]
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▶ How MasterCard Makes its Money   [10:17AM  Investopedia]
▶ [$$] Mastercard Reports Higher Earnings   [09:22AM  The Wall Street Journal]
▶ MasterCard: 2Q Earnings Snapshot   [08:10AM  Associated Press]
▶ Q2 Earnings Outlook For MasterCard   [03:29PM  Benzinga]
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▶ [$$] Mastercard Says It Has Resolved Outage Issues   [03:28PM  The Wall Street Journal]
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