Analysis of Debt
Total Debt (Carrying Amount)
Microsoft Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
The analysis of the reported debt figures reveals several notable trends over the observed periods.
- Short-term debt
- This metric shows limited visibility, with data available only for June 30, 2024, amounting to 6,693 million US dollars. The absence of prior values impedes trend analysis for this category.
- Current portion of long-term debt
- The current portion of long-term debt exhibits significant fluctuations across the periods. Initially, a value of 3,749 million US dollars is reported in mid-2020, followed by a sharp increase to 8,072 million in 2021. Subsequently, the amount decreases to 2,749 million in 2022, rises again to 5,247 million in 2023, then falls to 2,249 million in 2024, and modestly increases to 2,999 million in 2025. This volatility suggests active refinancing or repayments affecting short-term maturities of long-term debt.
- Current finance lease liabilities
- Current finance lease liabilities show a consistent upward trend, starting at 540 million US dollars in 2020 and increasing steadily to reach 3,172 million by 2025. This pattern indicates a rising reliance on lease financing within the short-term obligations.
- Long-term debt, excluding current portion
- This key category reveals a declining trend from 59,578 million US dollars in 2020 to 40,152 million in 2025. The decrease appears relatively steady, with minor variances, signaling ongoing principal repayments or possible debt restructuring efforts that reduce long-term liabilities over time.
- Long-term finance lease liabilities
- In contrast to traditional long-term debt, long-term finance lease liabilities grow substantially, from 8,956 million in 2020 to 43,000 million in 2025. This marked increase suggests a strategic shift toward financing through leases rather than conventional debt instruments, which may impact balance sheet leverage profiles.
- Total debt and finance lease liabilities (carrying amount)
- The aggregated total demonstrates moderate fluctuations with an initial value of 72,823 million US dollars in 2020, a slight dip to 64,683 million in 2022, followed by an upward trajectory peaking at 89,323 million in 2025. This overall increase reflects the combined effect of growing finance lease liabilities and varying traditional debt levels, indicating an overall expansion in total indebtedness.
In summary, the data portrays a complex debt structure characterized by diminishing traditional long-term debt balanced by increasing finance lease obligations, both in the short and long term. The company appears to be leveraging finance leases as a growing source of financing while actively managing and reducing its conventional long-term debt. The fluctuations in current portions of long-term debt point to ongoing debt management activities, possibly related to maturity profiles and refinancing strategies. The overall rise in total liabilities signals expanding leverage, influenced heavily by leasing commitments.
Total Debt (Fair Value)
| Jun 30, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term debt | —) |
| Long-term debt, including current portion | 40,400) |
| Finance lease liabilities | 46,172) |
| Total debt and finance lease liabilities (fair value) | 86,572) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.97 |
Based on: 10-K (reporting date: 2025-06-30).
Weighted-average Interest Rate on Debt
Weighted average effective interest rate on debt and finance lease liabilities: 4.39%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 5.24% | 520) | 27) | |
| 4.57% | 486) | 22) | |
| 5.36% | 718) | 38) | |
| 3.57% | 454) | 16) | |
| 4.92% | 314) | 15) | |
| 3.22% | 2,700) | 87) | |
| 4.78% | 7,555) | 361) | |
| 4.03% | 7,930) | 320) | |
| 5.49% | 6,833) | 375) | |
| 5.43% | 10,111) | 549) | |
| 3.04% | 8,185) | 249) | |
| 5.49% | 56) | 3) | |
| 5.49% | 3,344) | 184) | |
| 4.20% | 46,172) | 1,939) | |
| Total | 95,378) | 4,186) | |
| 4.39% | |||
Based on: 10-K (reporting date: 2025-06-30).
1 US$ in millions
2 Weighted-average interest rate = 100 × 4,186 ÷ 95,378 = 4.39%