How much of PayPal’s revenue comes from interest-rate arbitrage?
Payments
Asked by Question Bot01/Mar/20171 answer
1 Answer
F
Faisal Khan
Answered 01/Mar/2017
This is a hard one to answer, as PayPal, more specifically Ebay doest not disclose the income derived from the money they hold, which in accounting terms would be aggregate cash deposits.
Per the last filing Ebay had cash equivalent of $15.1 Billion, in Europe cumulative $7.0 Billion in Aggregate Cash Deposits (September 2014 figures).
They structure these deposits as various interest bearing instruments, with the financial institutions they work with.
Its not like this cash is not committed. Cash and Cash equivalent (which I think Ebay had like excess of $10 Billion) are all utilized to ensure maximum return to the company.
Another point to note, regarding Segmentation.
Don't be thinking that everywhere you see the word interest in their balance sheet, that it represents income derived from cash-in-hand that was then invested for short or long term periods. That assessment is not accurate.
Per the last filing Ebay had cash equivalent of $15.1 Billion, in Europe cumulative $7.0 Billion in Aggregate Cash Deposits (September 2014 figures).
They structure these deposits as various interest bearing instruments, with the financial institutions they work with.
Its not like this cash is not committed. Cash and Cash equivalent (which I think Ebay had like excess of $10 Billion) are all utilized to ensure maximum return to the company.
Another point to note, regarding Segmentation.
We have three reportable segments: Marketplaces, Payments and Enterprise. We allocate resources to and assess the performance of each reportable segment using information about its revenue and operating income (loss). We do not evaluate operating segments using discrete asset information. We do not allocate gains and losses from equity investments, interest and other income, or taxes to our reportable segments.Source: eBay Inc. - Quarterly Report
Don't be thinking that everywhere you see the word interest in their balance sheet, that it represents income derived from cash-in-hand that was then invested for short or long term periods. That assessment is not accurate.