group assignment financial analysis and reporting of companies

Quick ratio acid-test ratio - The Acid-Test Ratio is a common ratio that is used to determine the liquidity of a company.. In other words, this ratio determines if the company has enoug

Tran Nguyen Diem Quynh - SS171009

Le Tran Duy Khanh - SS170970

Nguyen Nhat Khang - SS170932

Le Tran Nhat Minh - SS171085

Ngo Phuong Diem Quynh - SS170753

School: FPT UniversityCourse Name: ACC101Instructor: Vu Tung Linh

Date: 8 November 2022

I ABOUT COMPANIES 1

1 Paypal Company 1

2 MasterCard Company 1

3 Visa Company 1

II BALANCE SHEET AND INCOME STATEMENT 2

III DEFINITIONS OF FINACIAL INDICATORS 6

IV THE ANALYSIS OF EACH COMPANY IN THREE YEARS 2019, 2020 AND 2021 .7 1 Paypal 7

2 MasterCard 11

c Solvency Ratios 13

d Effciency 13

3 Visa 14

c Solvency Ratios 16

replaced traditional paper methods such as checks and money orders

- Paypal earns money by processing payments for online merchants, auction sites, and other commercial clients

2 MasterCard Company

- MasterCard Worldwide is a multinational company headquartered in Purchase, New York, USA, for whom the main business is to facilitate payments between the buyer's and seller's banks through the use of

"MasterCard" labeled debit and credit cards for buyers

3 Visa Company

- Visa is an American multinational financial services corporation headquartered in San Francisco, California It is one of the world's most valuable companies

- It empowers electronic money transfers all over the world, most notablyvia Visa-branded credit cards, debit cards, and prepaid cards

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- Visa does not issue cards, extend credit, or set rates and fees for consumers; instead, Visa offers Visa-branded payment products to financial firms, which they then use to offer credit, debit, prepaid, and cash access programs to their clients

1 Paypal

2 MasterCard

3 Visa

2 Quick ratio ( acid-test ratio )

- The Acid-Test Ratio is a common ratio that is used to determine the liquidity of a company In other words, this ratio determines if the company has enough liquid assets to pay current liabilities A common rule of thumb is for the Acid-Test Ratio to be at least one point zero, butthis can vary from industry to industry

3 Days sale uncollected

5 Debt to equity

- The debt-to-equity ratio provides investors with an overview of the company's financial power and financial condition If this coefficient is greater than one, the assets of the business are mainly financed by debt; otherwise, the assets of the business are mainly financed by equity

6 Debt to asset

- The debt-to-assets ratio is a type of leverage ratio used to determine the total amount of debt relative to assets, allowing comparisons of the degree of leverage used between different companies

IV THE ANALYSIS OF EACH COMPANY IN THREE YEARS 2019, 2020 AND 2021

1. Paypal

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- The ratios of profit margin had fluctuated during 2020 The

2019-2020 period recorded an efficient profitability of managing cost to generate income, which was 0.14 in 2019 and 0.20 in 2020 However, the period 2020-2021 overcame a reduction in managing profitability, which dropped 0.4 compared to 2020 This showed that in 2020, enduring the severe impact in Covid 19, Paypal income was reduced and needed more cost to operate

b Liquidity Ratios

- As you can see in the table, from the year 2019 to 2021 the company has an amount which is larger than 1 and considered as an acceptable ratio From that, PayPal can attract many investors to pour the money into the company, and also lend the money from the bank to overcome some difficult situation like COVID 19 pandemic or expanding their business Conversely, we can realize the number is gradually decreasing

and reached 1.4, which shows that the company can cover its short-termobligations and this ratio does not exceed industry standards and are within reasonable range The quick ratio of Pay Pal fell slowly from 1.4

to 1.3 and from 1.3 to 1.2 in 3 years can indicate that the company’s sales are decreasing or it has taken on too much debt

- PayPal Day’s sale uncollected ratio gradually increases throughout the years, from 8,9 in 2019 to 10,1 in 2021 The ratio measures how long it will take for customers to pay their credit card balances Higher ratio means the company needs more time to convert sales into cash But compared to two other companies, which are MasterCard and Visa, PayPal has the least ratio Less than MasterCard approximately 50 units,and less than Visa about 100 units

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- Paypal's ratio could very well decrease from 2.49 in 2019 to 2.03 in

2021 This shows that Paypal is borrowing less capital in the market to fund its operations, resulting in increased equity in their journal

- It can be seen that the company's debt ratio in 3 years 2019, 2020, 2021

times is 0.67 times; 0.71 and 0.71 (<1) that indicate the company owns more assets than liabilities and can meet its obligations by selling its assets if needed However, debt ratios in 2020 and 2021 are higher than they were in 2019, indicating greater financial leverage and, thus, greater risk when making investments and loans

- Based on the table of data that can be seen, the equity ratio of PayPal in

3 years 2019, 2020, 2021 is 0.33 respectively; 0.33 and 0.29 (<0.5) That shows the company is considered financially leveraged Since the equity ratio in 2021 decreased by 0.4 compared to 2020 and 2019, it can

be seen that the company is using a lot of leverage

This could be explained that during 2020-2021 term, the negative impact of Covid 19 effect on Paypal made the organization manage the assets less efficiently compared to 2019 in order to generate sales.

2. MasterCard

a Profitability Ratios

- The ratios of profit margin had fluctuated during 2020 The

2019-2020 period recorded an ínufficieny profitability of managing cost to generate income, which was 0.48 in 2019 and 0.42 in 2020 However, the period 2020-2021 experienced a rise in managing profitability, which grew at 0.4 point To sum up, MasterCard recorded a fine, managing in profit

in expectation of tough economic times As a result, PayPal's payment volume and revenue are reduced.

- The company's quick ratio is at a reasonable level, not too low and higher than the average in 3 years from 2019-2021 Master Cards tend

to be confident in the company's ability to pay its current obligations and debts

MasterCard’s ratio is not as high as Visa, but much higher than PayPal’sratio, about more than 50 units This also means the company collection process takes longer and their customers are not willing or unable to paythem

c Solvency Ratios

- MasterCard's debt to equity ratio may fall from 4.10 in 2019 to 3.93 in 2021 This indicates that Paypal is borrowing less capital from the market to fund its operations, resulting in more equity in their journal

- The debt ratio of the master card in 3 years 2019, 2020, 2021 is higher than that of Paypal The indicators are: 0.80 (2019); 0.81 (2020) and 0.80 (2021) This also shows that the company owns more assets than liabilities Besides, in 2020, the coefficient has increased by 0.1 compared to 2019 and by 2021 it will return to exactly the same

as the coefficient of 2019 Because this ratio increases and decreases unevenly, the

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- According to the table of data, the equity ratio of MasterCard in 3 years is 0.20 (2019) respectively; 0.19 (2020) and 0.20 (2021) That shows the company is also considered to be financially leveraged Since the equity ratio in 2020 decreased by 0.1 compared to 2019 and returned to 0.20 in 2021, it can be seen that the company uses a lot of leverage in 2020 and tends to reduce leverage by 2021.

d Effciency

- In the table, there is a decrease from 0.63 to 0.5 between the year 2019 and 2020 This can be explained that MasterCard could not generate enough revenue from doing business due to the poor collection methods

in which there were many account receivables they could not collect andhad to write off For the period from 2020 to 2021, the ratio has increased to 0.53 means that they have improved their way to collect therevenue, and reduced the number of money loss

3. Visa

b Liquidity Ratios

- In the table, the number of current ratios increases significantly from 1.27 in 2019 to 2.12 in 2020 This increase can be explained by the payment behavior that has changed by citizens When the coronavirus appeared, people changed the method for paying due to lockdown Instead of using cash, they use their credit card, the more transactions made, the more money would go into the company as Visa receives service revenue from institutional clients such as banks and other partners who require Visa-branded payment solutions And with a decrease in 2021, it was caused by an increase in the current liabilities

of Visa which was $15.739B, a 8.47% increase from 2020 This

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increase is also including the acquire Tink in which Visa will pay total financial consideration of 1.8 billion Euros, inclusive of cash and retention incentives

- In 2019, Visa has a relatively high quick ratio, capable of paying obligations normally In 2020, this ratio suddenly increased and reached1.96, which represents a significant improvement in revenue and high liquidity in the accounts received by the company, besides that Visa is completely get rid of obligations and current debt in this year In 2021, the index returned to balance when it dropped to 1.26 but the company still completely controlled the liquidity

-c Solvency Ratios

- Visa has the lowest equity ratio of the three Visa's equity ratio could fall from 1.26 in 2019 to 1.12 in 2021 This demonstrates that Visa is borrowing less capital in the market to fund itsoperations, which results in increased equity in their journal

debt-to-indicate the possibility of default at some point in the future.

- It can be seen that the equity ratio of Visa company is lower than 0.5, which indicates the company has financial leverage but is not yet effective in controlling and managing its liabilities and financing its asset claims In 3 years with the company's equity ratio not increasing but decreasing from 0.44-0.47, this shows the company primarily used debt to acquire assets, which is widely viewed as an indication of greater financial risk Because Visa's ratio is higher than that of PayPal and MasterCard, Visa is financially stronger and has a higher long-term solvency than the other two companies

d Effciency

- The total assets turnover of Visa has seen an increase from 0.07 in 2019

to 0.09 in 2021, and it is not a good signal for the company The suitable

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number should fluctuate between 0.25 and 0.5 for this industry, but the amount has increased which means the company was still trying to reduce the money loss and generating assets effectively to earn more profit And for the next few years, if it still gradually increases like this, Visa will become one of the most valuable brands in the US or all over the world

[4].Visa signs agreement to acquire Tink (no date) Tink Available at:

https://tink.com/press/visa-acquires-tink/ (Accessed: November 7, 2022).[5].Mukhopadhyay, S (2022) Asset turnover ratio WallStreetMojo, Available at:https://www.wallstreetmojo.com/asset-turnover-ratio/#h-if-the-asset-turnover-ratio-1 (Accessed: November 7, 2022)

[6].PayPal Holdings, Inc (no date) AnnualReports.com Available at:

https://www.annualreports.com/Company/paypal-holdings-inc (Accessed:November 7, 2022)

[7].Visa, Inc (no date) AnnualReports.com. Available at:https://www.annualreports.com/Company/visa-inc (Accessed: November 7, 2022).[8].MasterCard incorporated (no date) AnnualReports.com Available at:

https://www.annualreports.com/Company/mastercard-incorporated (Accessed:November 7, 2022)

[9].Debt to asset ratio (2022) Corporate Finance Institute Available at:https://corporatefinanceinstitute.com/resources/commercial-lending/debt-to-asset-ratio/ (Accessed: November 7, 2022)