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MasterCard Inc (NYSE:MA)
Financial Strength Rank
9 (As of Dec. 2013)

MasterCard Inc has the Financial Strength Rank of 9. It shows strong financial strength and is unlikely to fall into distressed situations.

Good Sign:

MasterCard Inc shows strong financial strength.

GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors:

• 1. The debt burden that the company has as measured by its interest coverage (current year). The higher, the better.
• 2. Debt to revenue ratio. The lower, the better.
• 3. Altman Z-score.

MasterCard Inc's interest coverage for the quarter that ended in Dec. 2013 was 131.43. MasterCard Inc's debt to revenue ratio for the quarter that ended in Dec. 2013 was 0.00. As of today, MasterCard Inc's Altman Z-score is 10.76.


Definition

GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its interest coverage (current year). The higher, the better.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company’s Operating Income (EBIT) by its Interest Expense:

MasterCard Inc's interest expense for the three months ended in Dec. 2013 was $-7 Mil. Its operating income for the three months ended in Dec. 2013 was $920 Mil. And its Long-Term Debt for the quarter that ended in Dec. 2013 was $0 Mil.

MasterCard Inc's Interest Coverage for the quarter that ended in Dec. 2013 is

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*920/-7
=131.43

The higher the ratio, the stronger the company’s financial strength is.

Good Sign:

MasterCard Inc has no debt.

2. Debt to revenue ratio. The lower, the better.

MasterCard Inc's Debt to Revenue Ratio for the quarter that ended in Dec. 2013 is

Debt to Revenue Ratio=Total Debt (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Current Portion of Long-Term Debt + Long-Term Debt) / Revenue
=(0 + 0) / 2126
=0.00

3. Altman Z-score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress” Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey” Zones.

MasterCard Inc has a Z-score of 10.76, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 10.84 is strong.

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


Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

MasterCard Inc has the Financial Strength Rank of 9. It shows strong financial strength and is unlikely to fall into distressed situations.


Related Terms

Profitability Rank, Altman Z-score, Interest Coverage, Operating Income, Interest Expense, Current Portion of Long-Term Debt, Long-Term Debt, Revenue

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