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MasterCard Incorporated (NYSE:MA)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

MasterCard Incorporated has an F-score of 4 indicating the company's financial situation is typical for a stable company.

MA' s 10-Year Piotroski F-Score Range
Min: 4   Max: 6
Current: 4

4
6

During the past 13 years, the highest Piotroski F-Score of MasterCard Incorporated was 6. The lowest was 4. And the median was 5.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 623 + 879 + 848 + 766 = $3,116 Mil.
Cash Flow from Operations was 1199 + 1322 + 742 + 872 = $4,135 Mil.
Revenue was 2126 + 2218 + 2096 + 1906 = $8,346 Mil.
Gross Profit was 2126 + 2218 + 2096 + 1906 = $8,346 Mil.
Total Assets at the begining of this year (Dec12) was $12,462 Mil.
Total Assets was $14,242 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $10,950 Mil.
Total Current Liabilities was $6,032 Mil.
Net Income was 605 + 772 + 700 + 682 = $2,759 Mil.

Revenue was 1895 + 1918 + 1820 + 1758 = $7,391 Mil.
Gross Profit was 1895 + 1918 + 1820 + 1758 = $7,391 Mil.
Total Assets at the begining of last year (Dec11) was $10,693 Mil.
Total Assets was $12,462 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $9,357 Mil.
Total Current Liabilities was $4,906 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

MasterCard Incorporated's current net income was 3,116. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

MasterCard Incorporated's current cash flow from operations was 4,135. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Dec12)
=3116/12462
=0.25004012

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=2759/10693
=0.25801926

MasterCard Incorporated's return on assets of this year was 0.25004012. MasterCard Incorporated's return on assets of last year was 0.25801926. ==> Last year is higher ==> Score 0.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

MasterCard Incorporated's current net income was 3,116. MasterCard Incorporated's current cash flow from operations was 4,135. ==> 4,135 > 3,116 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=0/14242
=0

Gearing (Last Year)=Long-Term Debt/Total Assets
=0/12462
=0

MasterCard Incorporated's gearing of this year was 0. MasterCard Incorporated's gearing of last year was 0. ==> Last year is lower ==> Score 0.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=10950/6032
=1.8153183

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=9357/4906
=1.90725642

MasterCard Incorporated's current ratio of this year was 1.8153183. MasterCard Incorporated's current ratio of last year was 1.90725642. ==> Last year's current ratio is higher ==> Score 0.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

MasterCard Incorporated's number of shares in issue this year was 1214. MasterCard Incorporated's number of shares in issue last year was 1260. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=8346/8346
=1

Gross Margin (Last Year)=Gross Profit/Revenue
=7391/7391
=1

MasterCard Incorporated's gross margin of this year was 1. MasterCard Incorporated's gross margin of last year was 1. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Dec12)
=8346/12462
=0.66971594

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=7391/10693
=0.69119985

MasterCard Incorporated's asset turnover of this year was 0.66971594. MasterCard Incorporated's asset turnover of last year was 0.69119985. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+0+1+0+0
=4

Good or high score = 8 or 9

Bad or low score = 0 or 1

MasterCard Incorporated has an F-score of 4 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

MasterCard Incorporated Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 11011111
Q2 11111111
Q3 01011010
Q4 10100111
Q5 11111000
Q6 10011010
Q7 01100111
Q8 00000000
Q9 00000100
F-score 55455564

MasterCard Incorporated Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1000011110
Q4 1111111111
Q5 1000000000
Q6 0000011100
Q7 1111111111
Q8 1000000000
Q9 1110000000
F-score 8554466654
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