Analysis of Debt
Total Debt (Carrying Amount)
Microsoft Corp., balance sheet: debt
US$ in millions
Based on: 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), 10-K (reporting date: 2019-06-30).
The analysis of the annual debt-related financial data reveals several notable trends and shifts over the reporting periods.
- Short-term debt
- This item was not recorded in earlier years but appears in 2024 with a significant value of 6,693 million US dollars, suggesting either a new classification or an increase in short-term borrowing obligations for that year.
- Current portion of long-term debt
- There is considerable volatility in this category. The value decreased from 5,516 million in 2019 to 3,749 million in 2020, sharply rose to 8,072 million in 2021, then declined again in subsequent years to 2,249 million by 2024. This fluctuation might reflect refinancing activities, repayments, or reclassification of debt portions within the short-term horizon.
- Current finance lease liabilities
- Current finance lease liabilities show a consistent upward trend, growing from 317 million in 2019 to 2,349 million in 2024. This increase indicates expanding obligations from finance leases that are due within one year, potentially reflecting greater use of leased assets or changes in lease accounting.
- Long-term debt, excluding current portion
- This component demonstrates a steady decline over the years, decreasing from 66,662 million in 2019 to 42,688 million in 2024. This steady reduction suggests a strategic decrease in long-term borrowing or debt repayments exceeding new issuances. The decline could also represent debt restructuring efforts.
- Long-term finance lease liabilities
- Long-term finance lease liabilities have shown significant growth, rising from 6,257 million in 2019 to 24,796 million in 2024. This sharp increase represents a greater reliance on finance leases for long-term asset financing or changes in lease capitalizations under applicable accounting standards.
- Total debt and finance lease liabilities (carrying amount)
- The total carrying amount of debt and finance lease liabilities decreased from 78,752 million in 2019 to a low of 64,304 million in 2023, before rebounding strongly to 78,775 million in 2024. Despite the earlier downward trend, the recovery suggests new borrowing or increased lease obligations, particularly notable in 2024.
Overall, the data indicates a shift in the composition of the company's debt from traditional long-term borrowing toward increased finance lease liabilities and short-term debt observed in the latest period. The volatility in the current portion of long-term debt also points to active debt management strategies. The upward trend in finance lease liabilities, both current and long-term, suggests growing reliance on leasing as a financing mechanism. The pronounced increase in total debt and finance lease liabilities in the most recent year may warrant closer monitoring regarding liquidity and leverage risk going forward.
Total Debt (Fair Value)
| Jun 30, 2024 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term debt | 6,693) |
| Long-term debt, including current portion | 42,300) |
| Finance lease liabilities | 27,145) |
| Total debt and finance lease liabilities (fair value) | 76,138) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.97 |
Based on: 10-K (reporting date: 2024-06-30).
Weighted-average Interest Rate on Debt
Weighted average effective interest rate on debt and finance lease liabilities: 4.43%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 5.40% | 6,693) | 361) | |
| 5.24% | 520) | 27) | |
| 4.57% | 486) | 22) | |
| 5.36% | 718) | 38) | |
| 3.57% | 454) | 16) | |
| 4.92% | 314) | 15) | |
| 3.22% | 2,465) | 79) | |
| 4.78% | 9,805) | 469) | |
| 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) | |
| 3.90% | 27,145) | 1,059) | |
| Total | 85,059) | 3,767) | |
| 4.43% | |||
Based on: 10-K (reporting date: 2024-06-30).
1 US$ in millions
2 Weighted-average interest rate = 100 × 3,767 ÷ 85,059 = 4.43%