Microsoft Corp. (NASDAQ:MSFT)

The data reveals notable trends in the composition and valuation of intangible assets over the analysis period.

Goodwill

There is a steady increase in goodwill from 43,351 million USD in 2020 to a peak of 119,509 million USD in 2025, indicating significant acquisitions or revaluations contributing to the intangible asset base.

Marketing-related Intangible Assets

Marketing-related assets remain relatively stable from 2020 through 2023, ranging between approximately 4,158 and 4,942 million USD. A sharp increase occurs starting in 2024, reaching around 16,500 million USD, suggesting either new investments or acquisitions with substantial marketing-related intangibles.

Technology-based Intangible Assets

Technology-related assets show consistent growth from 8,160 million USD in 2020 to about 22,560 million USD in 2025, indicating ongoing investment and possibly technological acquisitions.

Customer-related Intangible Assets

Customer-related assets exhibit a mild fluctuation, starting near 4,967 million USD in 2020, peaking in 2022 at 7,342 million USD, and then declining steadily to 4,278 million USD by 2025. This pattern could suggest attrition of customer contracts or reclassification.

Contract-based Intangible Assets

This category remains low but shows a notable increase from 16 million USD in 2022 to 217 million USD in 2025, indicating growing contract valuations or acquisitions impacting this type.

Finite-lived Intangible Assets (Gross Carrying Amount)

These assets increase from approximately 17,759 million USD in 2020 to a peak around 44,509 million USD in 2024, before slightly decreasing to 43,557 million USD in 2025. This suggests active capitalizing of finite-lived intangibles over the years with a slight reduction or adjustment thereafter.

Accumulated Amortization

Accumulated amortization consistently rises in magnitude (negative values indicating a contra asset account) from -10,721 million USD in 2020 to -20,953 million USD in 2025, reflecting ongoing amortization expense matching the growth of finite-lived assets.

Finite-lived Intangible Assets (Net Carrying Amount)

The net carrying amount shows variable trends, initially growing from 7,038 million USD in 2020 and peaking in 2024 at 27,597 million USD, then declining to 22,604 million USD in 2025, likely due to amortization outpacing new additions or impairment considerations.

Goodwill and Intangible Assets (Total)

The total goodwill and intangible assets nearly triple from 50,389 million USD in 2020 to 142,113 million USD in 2025, underlining a significant buildup of intangible assets, mainly driven by increases in goodwill and technology-based intangibles.

Overall, the data indicates substantial growth and revaluation in intangible asset categories, particularly goodwill and technology-based assets, with increasing amortization reflecting the aging of finite-lived intangibles. The marked rises in marketing and contract-based intangibles from 2024 onward suggest strategic acquisitions or investments enhancing these specific intangible classes.

Asset Trends

Reported total assets exhibited a consistent increase each year from US$301.3 billion in 2020 to a projected US$619.0 billion in 2025, indicating strong asset growth over the period. Adjusted total assets, which appear to exclude goodwill or similar adjustments, also followed an upward trajectory, starting at US$258.0 billion in 2020 and rising to US$499.5 billion in 2025. While both reported and adjusted assets grew substantially, the gap between reported and adjusted assets widened notably, suggesting an increasing proportion of goodwill or intangible assets over time.

Stockholders’ Equity Trends

Reported stockholders’ equity showed steady growth, rising from US$118.3 billion in 2020 to an estimated US$343.5 billion in 2025. Similarly, adjusted stockholders’ equity shows a pronounced increase from approximately US$74.9 billion in 2020 to US$224.0 billion in 2025. The adjusted equity figures are consistently lower than reported equity but demonstrate a more rapid growth rate from 2022 onwards, particularly notable between 2023 and 2025. This indicates that the company’s underlying equity, excluding goodwill, has strengthened considerably over recent years.

Insight on Goodwill and Intangible Assets

The divergence between reported and adjusted figures for both assets and equity suggests that a substantial and increasing portion of total assets and equity is attributable to goodwill or intangible assets. The magnitude of this intangible component appears to have grown significantly from 2023 onwards, contributing to a larger portion of total assets and equity on the reported basis. This trend may reflect acquisitions or internal capitalizations impacting reported values but excluded in adjusted figures.

Summary of Financial Position

Overall, the company demonstrates robust growth in both total assets and stockholders’ equity over the six-year span, with a strong and accelerating increase projected into 2025. The adjusted metrics reveal an underlying strengthening of tangible equity and assets, notwithstanding the growing impact of intangible assets such as goodwill. The consistent upward movement in all categories underscores a solid and expanding financial position across all reported periods.

Total Asset Turnover

The reported total asset turnover ratio showed a moderate increase from 0.47 in 2020 to a peak of 0.54 in 2022, followed by a gradual decline reaching 0.46 in 2025. The adjusted total asset turnover, which accounts for goodwill, exhibited a similar pattern but at higher levels overall, increasing more sharply to 0.67 in 2022 before settling around 0.56 in 2025. This indicates that asset utilization improved notably before tapering off, with adjustments suggesting a stronger asset efficiency than reported figures alone.

Financial Leverage

Reported financial leverage steadily declined from 2.55 in 2020 to 1.8 in 2025, indicating decreasing reliance on debt relative to equity. The adjusted financial leverage also decreased overall but experienced some fluctuations, falling from 3.44 in 2020 to 2.49 in 2023, then rising slightly to 2.63 in 2024 before dropping again to 2.23 in 2025. The higher adjusted leverage ratios compared to reported figures suggest that goodwill adjustments increase the proportion of liabilities or decrease equity, impacting leverage measures.

Return on Equity (ROE)

Reported ROE peaked at 43.68% in 2022 and subsequently declined to 29.65% in 2025, reflecting a tapering in shareholder returns over the period. Adjusted ROE, accounting for goodwill, was significantly higher, reaching a high of 73.46% in 2022 before decreasing to 45.47% in 2025. The adjusted figures highlight higher profitability for shareholders when goodwill is considered, although both sets demonstrate a declining trend post-2022.

Return on Assets (ROA)

Reported ROA rose from 14.7% in 2020 to 19.94% in 2022, followed by a decline to 16.45% in 2025. Adjusted ROA showed a similar trajectory but at consistently higher levels, increasing to a peak of 24.46% in 2022 and then declining to 20.39% by 2025. This suggests improved asset profitability up to 2022 and a subsequent reduction, with adjusted ROA illustrating stronger returns considering asset base adjustments.

The analysis of the financial data reveals distinct trends in both reported and goodwill-adjusted figures over the period examined.

Total Assets

The reported total assets have shown a consistent upward trajectory from 301,311 million US dollars in mid-2020 to 619,003 million US dollars in mid-2025, effectively more than doubling over the five-year span. The goodwill-adjusted total assets, while lower, also demonstrate steady growth, increasing from 257,960 million to 499,494 million US dollars over the same period. This growth suggests ongoing asset accumulation, though the difference between reported and adjusted figures indicates considerable goodwill components included in the reported assets.

Total Asset Turnover

The reported total asset turnover ratio exhibits a mild fluctuation. The ratio starts at 0.47 in 2020, peaks at 0.54 in 2022, and subsequently declines to 0.46 by 2025. This trend may indicate decreasing efficiency in generating revenue from reported assets post-2022.

By contrast, the adjusted total asset turnover shows higher values throughout the period, starting at 0.55, peaking at 0.67 in 2022, and then decreasing gradually to 0.56 by 2025. Despite the decline from the peak, the adjusted turnover remains consistently above the reported turnover, suggesting that when excluding goodwill, the asset base is utilized more effectively in generating revenue.

Insights

The increasing gap between reported and adjusted total assets confirms the significance of goodwill on the balance sheet, impacting the efficiency ratios when included. The peak in asset turnover ratios around 2022 followed by a decline implies that operational efficiency might have been optimal in earlier years but faced challenges in recent periods, even as asset bases expanded. The adjusted figures portray a more favorable asset utilization scenario, underlining the importance of considering asset composition in performance evaluations.

The analysis of the financial data over the periods ending June 30 from 2020 to 2025 reveals several important trends regarding the company’s asset base, equity, and leverage both on a reported and goodwill-adjusted basis.

Total Assets

Reported total assets consistently increased each year, rising from $301.3 billion in 2020 to $619.0 billion in 2025, demonstrating steady growth in the company’s asset base. Adjusted total assets, which likely exclude goodwill or other intangible assets, also showed growth over the same period, from $258.0 billion in 2020 to $499.5 billion in 2025, but at a somewhat slower pace relative to the reported figures. This indicates that goodwill or intangible assets constitute a meaningful portion of the asset increase.

Stockholders’ Equity

Reported stockholders’ equity exhibits strong upward momentum, increasing from $118.3 billion in 2020 to $343.5 billion in 2025. Adjusted stockholders’ equity also grew, but started from a substantially lower base of $74.9 billion in 2020, ending at $224.0 billion in 2025. The gap between reported and adjusted equity narrows somewhat over time, reflecting changes in the composition or valuation of equity components possibly related to goodwill adjustments.

Financial Leverage

Reported financial leverage shows a consistent downward trend, decreasing from 2.55 in 2020 to 1.80 in 2025. This suggests an improving equity position relative to the asset base, implying reduced reliance on debt or other liabilities. On an adjusted basis, financial leverage also declines from 3.44 in 2020 to 2.23 in 2025, but with slight fluctuations—most notably a minor increase in 2024 to 2.63—indicating some variability when intangible assets are excluded. Overall, the company appears to be deleveraging over the analyzed period on both reported and adjusted bases, enhancing its financial stability.

Stockholders’ Equity Trends

The reported stockholders' equity shows a consistent upward trend over the entire period, increasing from 118,304 million US dollars in mid-2020 to 343,479 million US dollars by mid-2025. This represents nearly a threefold increase, indicating substantial growth in the company’s equity base. The adjusted stockholders’ equity, which accounts for goodwill adjustments, also demonstrates growth but at a comparatively slower rate, rising from 74,953 million US dollars in 2020 to 223,970 million US dollars in 2025. Notably, the gap between reported and adjusted equity widens over time, suggesting either an accumulation of goodwill or other intangible assets not reflected in the adjusted figures.

Return on Equity (ROE) Analysis

The reported ROE starts at 37.43% in 2020 and rises to a peak of 43.68% in 2022, but then gradually declines to 29.65% by 2025. This declining trend after 2022 indicates diminishing profitability relative to reported equity, despite the growing equity base. In contrast, the adjusted ROE is consistently higher than the reported ROE across all years, starting at 59.08% in 2020 and reaching its peak of 73.46% in 2022. After the peak, it experiences a more pronounced decline, falling to 45.47% by 2025, though it remains significantly above the reported ROE. This suggests that profitability, when excluding goodwill and other intangible assets, is stronger but has also been decreasing in recent years.

Comparative Insights

The divergence between reported and adjusted equity and their corresponding ROEs highlights the impact of goodwill and intangible assets on the company's financial metrics. While both stockholders’ equity measures increase over time, the larger growth in reported equity compared to adjusted equity implies an increasing proportion of goodwill recorded on the balance sheet. The adjusted ROE figures, considerably higher than the reported ROE, suggest that excluding goodwill results in a more favorable measure of return, notably emphasizing the efficiency of the tangible equity employed in generating profits. However, the downward trend in both ROE metrics after 2022 warrants attention, as it may reflect either increased equity without proportionate profit growth or other business challenges affecting returns.

The financial data reveals a consistent increase in both reported and adjusted total assets over the observed periods. Reported total assets grew from 301,311 million US dollars in mid-2020 to 619,003 million US dollars by mid-2025, reflecting a strong asset expansion trend. Similarly, adjusted total assets increased from 257,960 million to 499,494 million US dollars in the same timeframe, indicating that even after adjusting for goodwill, asset growth remains substantial.

Regarding profitability, the reported Return on Assets (ROA) showed an initial rise from 14.7% in 2020 to a peak of 19.94% in 2022. However, after this peak, there is a noticeable gradual decline to 16.45% by 2025. This pattern suggests that while asset efficiency improved considerably at first, it faced downward pressure in the following years.

In contrast, the adjusted Return on Assets presents a slightly different trajectory. Starting at 17.17% in 2020, it increased more sharply to a peak of 24.46% in 2022, outperforming the reported ROA peak. After 2022, the adjusted ROA experienced a moderate decrease to 20.39% in 2025, yet it remains markedly higher than the reported ROA across all years. This indicates that when excluding goodwill, the company’s asset profitability is stronger and more resilient.

Overall, the asset base of the company is expanding steadily, with adjusted figures validating the robustness of this growth. Profitability as measured by ROA reached a high point in 2022 but has since contracted somewhat, though still maintaining relatively high levels. The adjusted ROA consistently outperforms the reported figures, implying that goodwill adjustments provide a clearer picture of the underlying asset efficiency and performance.