Some financial data and analysis of Visa Inc

Hi,

as promised, here are some financial data and analysis concerning Visa inc.

I will for the time being look at the 2011-2010 data. In other posts, I look into the previous years so that we have a good overall view.

- Long term debt is at 0 in 2011 against 32 million dollars in 2010. In other words, the company has no debt! This is really a good point. The businnes model of Visa enabled it to pay off it's debt in september 2011. This point can be seen in the Note 10 (the reading of the notes is a must as it gives a complete understanding of the accounts of a company): " The Company prepaid all of its outstanding debt in September 2011! Warren Buffett likes companies who have little or no debt. It is the sign that there is a very good business model.

- There is no short term debt (do not hesitate to correct me if I got it wrong!)

- Intrest expense is really low and the trend is going in the right direction (it's going down and getting closer to 0!): 32 million dollars in 2011, 72 million dollars in 2010, 115 million dolalrs in 2009.

- Stockholder's equity is at 26 437 million dollars in 2011 and at 25 011 million dollars in 2010.

- Net income attributable to Visa Inc was 3 650 million dollars in 2011, 2966 million dollars in 2010 and 2353 dollars in 2009.

These three set of  items are important to calculate the ROE and ROTC (indicators that I really like).

- ROE ratio: 14,59% (Net income of 2011 divided by the shareholder's equity of 2010 (It's the 2010 year that is taken as it is with the 2010 shareholder's equity that the net income of 2011 was gained).

-ROTC ratio: 14,57 % (Net income of 2011 divided by the shareholder's equity of 2010 plus the long term debt of 2010).

• The ROE and ROTC are very good
• The ROE and ROTC are nearly identical as Visa inc had nearly no debt in 2010. Thus, the company doesn't need debt to make it's business working.
• We could say that the ROE and ROTC could be higher but I would argue that it is due to a strong shareholder equity. In my opinion, Visa Inc is doing a good job by repurchasing shares which is a good way to give back money to the shareholders. Ok some will argue it's better to have an increase in the dividend but I prefer I company which buys back it's shares and thus increases the net result per share (which is as we have an owner perspective translates in an increase of our share of the company's profit which in due time will be correctly valued by the market).

What did you thing about this post?

I hope that you liked it!

Cheers

Jeremy