Analysis of Property, Plant and Equipment
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Property, Plant and Equipment Disclosure
Mastercard Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Building, building equipment and land
- The value has shown a consistent upward trend from 2018 to 2022, increasing from $481 million to $652 million, reflecting steady investment or appreciation over the period.
- Equipment
- This category also demonstrates a robust increasing pattern, rising from $987 million in 2018 to $1,711 million in 2022, indicative of significant additions or upgrades to equipment assets over the years.
- Furniture and fixtures
- Values in this category have been relatively stable, with a modest increase from $85 million in 2018 to $99 million in 2020, followed by a slight decline and stabilization at $96 million during 2021 and 2022, suggesting minimal changes in this asset class.
- Leasehold improvements
- After a notable increase from $215 million in 2018 to $380 million in 2020, the value slightly declined and then stabilized around $371-$376 million in the last two years, implying initial investment followed by maintenance or minor changes.
- Operating lease right-of-use assets
- Introduced in 2019 with $810 million, this asset item has steadily increased to $1,075 million by 2022, reflecting growing recognition of leased assets under accounting standards and possibly increasing lease activities or values.
- Property, equipment and right-of-use assets, gross
- The gross total has exhibited a strong upward trajectory, starting at $1,768 million in 2018 (prior to including right-of-use assets) and rising sharply to $3,910 million in 2022, driven by the inclusion and growth of right-of-use assets alongside other property and equipment categories.
- Accumulated depreciation and amortization
- The accumulated depreciation and amortization has increased in magnitude from -$847 million in 2018 to -$1,904 million in 2022, consistent with the growth in asset base and expected wear and usage over time.
- Property, equipment and right-of-use assets, net
- Net assets showed a significant jump from $921 million in 2018 to $1,828 million in 2019, mainly due to the addition of right-of-use assets. Afterward, this net figure grew more modestly, reaching $2,006 million in 2022, indicating steady asset growth after accounting for depreciation.
Asset Age Ratios (Summary)
Mastercard Inc., asset age ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Average age ratio
- The average age ratio displayed a decline from 47.91% in 2018 to 37.57% in 2019, indicating a renewal or replacement of assets during that period. However, from 2019 onwards, the ratio increased steadily each year, reaching 48.7% in 2022. This upward trend suggests an aging asset base over the last three years, possibly indicating reduced capital expenditures or extended use of existing property, plant, and equipment.
- Estimated total useful life
- The total useful life estimate was relatively stable, maintaining around eight years, with a slight increase to nine years in 2019. This consistency indicates a steady assumption about the lifespan of assets, with no significant changes in asset longevity expectations.
- Estimated age, time elapsed since purchase
- The estimated age of assets showed some fluctuation. It decreased from four years in 2018 to three years in 2019 and 2020, then returned to four years for 2021 and 2022. This pattern suggests acquisitions or dispositions that influenced the average age of assets, with a more recent investment around 2019 and 2020 followed by holding or limited new additions thereafter.
- Estimated remaining life
- The estimated remaining life values held steady at four or five years across the period. Notably, it was five years during 2019 and 2020 but reverted to four years for 2018, 2021, and 2022. This indicates a consistent expectation of the remaining useful lifespan of the assets without significant reassessment or changes in depreciation policies.
Average Age
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Average age = 100 × Accumulated depreciation and amortization ÷ Property, equipment and right-of-use assets, gross
= 100 × ÷ =
- Accumulated Depreciation and Amortization
- The accumulated depreciation and amortization increased consistently over the analyzed period, rising from US$847 million in 2018 to US$1,904 million in 2022. This steady growth reflects ongoing consumption and aging of the company's fixed assets, indicating that a considerable amount of the property, plant, and equipment has been depreciated each year.
- Property, Equipment, and Right-of-Use Assets, Gross
- The gross value of property, equipment, and right-of-use assets exhibited a significant upward trend, starting at US$1,768 million in 2018 and reaching US$3,910 million by the end of 2022. This nearly 121% increase suggests substantial investments in physical and leased assets, likely to support expanding operational capacity or modernization efforts.
- Average Age Ratio
- The average age ratio, expressed as a percentage, initially decreased from 47.91% in 2018 to a low of 37.57% in 2019, indicating a rejuvenation of the asset base early in the period. Subsequently, the ratio rose steadily to 48.7% by 2022, surpassing the initial level in 2018. This pattern suggests an initial addition of newer assets which temporarily lowered the average asset age, followed by a period in which asset aging caught up, possibly due to slower asset replacement or growing accumulation of older assets.
- Overall Insight
- The combined trends reveal active asset management characterized by consistent capital expenditure increasing the asset base, balanced by ongoing depreciation reflecting asset usage. The initial reduction then rise in average age ratio implies phases of asset renewal followed by aging. The growth in both gross asset value and accumulated depreciation underscores an expanding yet maturing property and equipment portfolio over the five-year span.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Estimated total useful life = Property, equipment and right-of-use assets, gross ÷ Depreciation and amortization expense for property, equipment and right-of-use assets
= ÷ =
- Gross Property, Equipment, and Right-of-Use Assets
- The gross value of property, equipment, and right-of-use assets increased steadily from US$1,768 million in 2018 to US$3,910 million in 2022. This represents a cumulative growth of approximately 121% over the five-year period, indicating consistent capital investment and asset acquisition.
- Depreciation and Amortization Expense
- Depreciation and amortization expenses related to property, equipment, and right-of-use assets rose from US$209 million in 2018 to US$473 million in 2022. This expense nearly doubled over the period, reflecting both the increased asset base and possibly changes in the asset composition or accounting policies. The trend shows continuous growth year-over-year without any declines.
- Estimated Useful Life
- The estimated total useful life of assets was relatively stable, varying only slightly between 8 and 9 years. It was at 8 years in 2018, increased to 9 years in 2019, and reverted to 8 years for the remaining years. This consistency suggests stable asset longevity assumptions underpinning depreciation calculations.
- Overall Observations
- The data indicates an ongoing expansion of the property's asset base, contributing to increased depreciation charges. The roughly doubled depreciation expense relative to 2018 levels aligns with the asset growth, reflecting a proportional use of resources over time. The stable useful life assumption supports consistent depreciation policy, allowing for reliable expense forecasting. These trends point to sustained investments in fixed assets alongside systematic expense recognition.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation and amortization expense for property, equipment and right-of-use assets
= ÷ =
- Accumulated Depreciation and Amortization
- There is a clear upward trend in accumulated depreciation and amortization from 2018 to 2022. The figure increased steadily every year, starting at $847 million in 2018 and reaching $1,904 million in 2022. This represents more than a doubling over the five-year period, indicating ongoing depreciation of the property, plant, and equipment assets as well as the amortization of intangible assets.
- Depreciation and Amortization Expense
- The annual depreciation and amortization expense has also shown a consistent increase throughout the timeline. Beginning at $209 million in 2018, it rose significantly to $473 million by 2022. This upward movement suggests increased charges against income related to asset wear and consumption, possibly due to higher levels of capital expenditure in previous years or changes in asset mix or valuation.
- Time Elapsed Since Purchase
- The time elapsed since purchase data varies between 3 and 4 years over the periods. It reflects the average age of the assets subject to depreciation and amortization. This relatively stable range suggests that the company maintains a consistent asset replacement or upgrade cycle, likely balancing asset additions with disposals or fully depreciated asset write-offs.
- Overall Analysis
- The data indicates a company actively managing and investing in its property, plant, and equipment, as evidenced by growing accumulated depreciation/amortization and increasing annual expense levels. The steady average age of assets supports the view of ongoing capital asset renewal. These trends could imply continued operational capacity and technological updates, requiring higher depreciation charges as new assets enter the depreciable base and older ones progress through their useful lives.
Estimated Remaining Life
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Estimated remaining life = Property, equipment and right-of-use assets, net ÷ Depreciation and amortization expense for property, equipment and right-of-use assets
= ÷ =
- Net Property, Equipment, and Right-of-Use Assets
-
The net value of property, equipment, and right-of-use assets experienced a significant increase from 921 million US dollars at the end of 2018 to 1,828 million US dollars in 2019. Following this sharp rise, the values showed a slower growth trend reaching 1,902 million in 2020, 1,907 million in 2021, and 2,006 million in 2022. Overall, the net assets more than doubled over the five-year period, indicating substantial investments or acquisitions in fixed assets particularly between 2018 and 2019, with subsequent moderate growth thereafter.
- Depreciation and Amortization Expense
-
The depreciation and amortization expense related to property, equipment, and right-of-use assets also showed a consistent upward trend. Starting at 209 million US dollars in 2018, the expense increased markedly to 336 million in 2019. It continued to rise in the following years to 400 million in 2020, 424 million in 2021, and reached 473 million in 2022. This steady increase suggests growing charges related to the aging or increased capitalized amounts of assets, reflecting ongoing consumption of the asset base and potentially new asset additions.
- Estimated Remaining Life of Assets
-
The estimated remaining life of the assets, measured in years, ranged from four to five years during the period. It was recorded as 4 years in 2018, increased to 5 years for the years 2019 and 2020, before returning to 4 years in 2021 and remaining stable at that level through 2022. This fluctuation may indicate changes in asset composition, acquisition of assets with different useful lives, or re-assessments of asset longevity.