Microsoft Corp. (NASDAQ:MSFT)

The financial data reveals several noteworthy trends concerning intangible assets over the six-year period ending June 30, 2024.

Goodwill

The goodwill balance shows a continuous increase overall, beginning at $42,026 million in 2019 and rising substantially to $119,220 million by 2024. This reflects significant acquisition activity or organic growth of business value, with a particularly marked step-up between 2023 and 2024.

Marketing-related Intangible Assets

Marketing-related assets remain relatively stable between 2019 and 2023, fluctuating slightly around the $4,100 to $4,900 million range. However, there is a sharp increase to $16,500 million in 2024, indicating a major investment or revaluation in marketing-related assets during the latest period.

Technology-based Intangible Assets

Technology-based assets show a steady upward trend from $7,691 million in 2019 to $21,913 million in 2024. The increase accelerates notably after 2022, which could indicate increased R&D capitalization or acquisition of technology assets.

Customer-related Intangible Assets

Customer-related assets increase from 2019 through 2022, peaking around $7,342 million, but then decline to $6,038 million in 2024. This suggests recent dispositions or amortizations impacting this asset category.

Contract-based Intangible Assets

Contract-based assets steadily decrease overall, from $574 million in 2019 down to $58 million in 2024, with values dropping dramatically after 2021. This downward trend may represent amortization or contract expirations.

Finite-lived Intangible Assets, Gross Carrying Amount

The gross carrying amount grows steadily from $17,139 million in 2019 to $44,509 million in 2024, more than doubling over the period. This is indicative of asset additions exceeding disposals or amortization.

Accumulated Amortization

Accumulated amortization increases negatively from -$9,389 million in 2019 to -$16,912 million in 2024, reflecting the systematic expensing of intangible assets over their useful lives. The change accelerates notably after 2022.

Finite-lived Intangible Assets, Net Carrying Amount

The net carrying amount of finite-lived intangibles fluctuates, starting at $7,750 million in 2019, dipping slightly in 2020, rising to a peak of $11,298 million in 2022, then dropping to $9,366 million in 2023 before a sharp increase to $27,597 million in 2024. This pattern corresponds with the gross asset additions and increased accumulated amortization, reflecting significant net additions or acquisitions in the final year.

Goodwill and Intangible Assets Total

The combined total increases steadily from $49,776 million in 2019 to $78,252 million in 2022, with a slight decline in 2023 to $77,252 million. The balance surges to $146,817 million in 2024, driven primarily by large increases in goodwill and finite-lived intangible assets. This highlights significant expansion of intangible asset base in the most recent period.

In summary, the data illustrates a strong and growing emphasis on intangible assets, particularly goodwill and technology-based assets, with notable spikes in marketing and finite-lived assets in the latest year. The accumulated amortization trends align with aging finite-lived assets, while some categories such as customer-related and contract-based assets display partial declines. These dynamics suggest a strategy focused on acquisition and capitalization of valuable intangible resources, especially evident in 2024.

The data reveals a consistent upward trend in both reported and adjusted financial metrics over the six-year period ending June 30, 2024. Total assets and stockholders' equity exhibit continuous growth, reflecting an expanding asset base and strengthening equity position.

Total Assets

Reported total assets increased steadily from approximately US$286.6 billion in 2019 to US$512.2 billion in 2024, representing a growth of about 79%. The adjusted total assets, which exclude certain intangible assets such as goodwill, increased from approximately US$244.5 billion to US$392.9 billion over the same period, marking a growth of approximately 61%. This consistent increase signals a robust expansion in asset holdings, although the difference between reported and adjusted figures suggests a significant portion of assets are attributable to intangibles.

Stockholders’ Equity

Reported stockholders’ equity experienced a pronounced rise from about US$102.3 billion in 2019 to US$268.5 billion in 2024, which is an increase of approximately 162%. Adjusted stockholders’ equity, excluding goodwill and related adjustments, grew from approximately US$60.3 billion to US$149.3 billion, increasing by about 148%. The substantial growth in equity, both reported and adjusted, highlights strong value creation and retained earnings accumulation over time.

Goodwill Impact

The disparity between reported and adjusted values for both total assets and equity points to significant goodwill or intangible adjustments. The recurring difference implies notable acquisitions or intangible asset recognition influencing the financial structure. The widening gap over the years suggests that such intangible assets are growing alongside the company’s tangible and physical assets.

Overall Observations

The overall upward trend in all key financial metrics over the six-year span indicates sustained financial growth. The company demonstrated effective asset growth management, which positively impacted equity. The increasing adjusted figures confirm underlying asset and equity growth beyond goodwill adjustments, illustrating a strengthening fundamental financial position. This trajectory denotes favorable operational and financial strategies contributing to consistent capital accumulation.

The financial data reveals several relevant trends in profitability and asset efficiency over the observed periods.

Total Asset Turnover

Reported total asset turnover gradually increased from 0.44 in 2019 to a peak of 0.54 in 2022, followed by a decline to 0.48 in 2024. The adjusted total asset turnover, which accounts for goodwill adjustments, shows a consistently higher ratio than the reported figures, rising steadily from 0.51 in 2019 to 0.67 in 2022 before slightly decreasing to 0.62 in 2023 and remaining stable in 2024. This pattern indicates improving efficiency in using assets to generate revenue until 2022, with a minor decline thereafter, though the adjustments suggest a stronger underlying performance.

Financial Leverage

Reported financial leverage declined steadily from 2.8 in 2019 to 1.91 in 2024, indicating a gradual reduction in reliance on debt or financial obligations relative to equity. The adjusted financial leverage also decreased significantly from 4.05 in 2019 to 2.49 in 2023, with a modest rise to 2.63 in 2024. The adjustment portrays a higher leverage baseline but follows the downward trend, highlighting an overall deleveraging stance with a slight uptick at the end.

Return on Equity (ROE)

Reported ROE showed an upward trend, moving from 38.35% in 2019 to a peak of 43.68% in 2022, followed by a noticeable decline to 32.83% by 2024. The adjusted ROE displays higher values throughout, initially at 65.07% in 2019, reaching a high of 73.46% in 2022 before dropping to 59.05% in 2024. This suggests that removing goodwill effects significantly enhances perceived profitability, with a sharp performance peak in 2022 and a subsequent reduction, though it remains relatively robust.

Return on Assets (ROA)

Reported ROA improved steadily from 13.69% in 2019 to 19.94% in 2022, declining moderately to 17.21% in 2024. Adjusted ROA values are higher at all points, rising from 16.05% in 2019 to 24.46% in 2022, then slightly decreasing to 22.43% by 2024. These figures reinforce the view of overall increased asset profitability, with goodwill adjustments providing a clearer indication of enhanced operational efficiency over time, albeit with some softening in the most recent years.

Overall, the data indicates improvement in asset utilization and profitability measures up to 2022, followed by a period of slight decline or stabilization by 2024. The goodwill adjustments consistently show higher efficiency and profitability metrics, suggesting that intangible assets have a significant impact on reported results. Financial leverage trends point to a conservative approach with decreasing leverage, though adjusted figures reflect somewhat greater leverage than reported. The recent downward trends in ROE and asset turnover warrant further monitoring to assess sustainability of performance.

The analysis of the financial data over the six-year period ending June 30, 2024, reveals several key trends related to total assets and asset turnover ratios, both reported and goodwill adjusted.

Total Assets

The reported total assets have shown consistent growth, increasing from US$286,556 million in 2019 to US$512,163 million in 2024. This represents a substantial rise, nearly doubling over the period. The adjusted total assets, which exclude goodwill, also demonstrate a positive growth trend, rising from US$244,530 million in 2019 to US$392,943 million by 2024. Although adjusted assets are consistently lower than reported assets, both metrics grow at a comparable pace, indicating that the company’s asset base expands steadily over time while accounting for adjustments due to goodwill.

Total Asset Turnover Ratios

The reported total asset turnover ratio shows a modest upward trend from 0.44 in 2019 to a peak of 0.54 in 2022, before declining to 0.48 in 2024. This pattern suggests that asset utilization efficiency improved until 2022 but experienced a slight reduction thereafter. Conversely, the adjusted total asset turnover ratio demonstrates a clearer and stronger improvement over the period, increasing from 0.51 in 2019 to 0.67 in 2022, and then settling at 0.62 in 2023 and 2024. The consistently higher values in adjusted turnover reflect better operational efficiency when goodwill is excluded from the asset base, emphasizing the effectiveness of the company in generating revenues from tangible and adjusted assets.

Overall, the data indicates solid growth in the asset base accompanied by improved utilization of assets through most of the period, particularly when adjusted for goodwill. The decline in reported asset turnover after 2022 may warrant further investigation to understand potential factors affecting operational efficiency in recent years.

Total Assets

The reported total assets have shown a consistent and substantial increase each year, rising from $286.6 billion in 2019 to $512.2 billion in 2024. Similarly, the adjusted total assets, which account for goodwill adjustments, have also grown steadily from $244.5 billion in 2019 to $392.9 billion in 2024. This indicates an ongoing expansion of the asset base over the period under review, though the adjusted asset figures are predictably lower due to the exclusion of goodwill.

Stockholders’ Equity

The reported stockholders' equity has increased markedly, from $102.3 billion in 2019 to $268.5 billion in 2024, reflecting a more than doubling over the six-year period. Adjusted stockholders' equity also increased significantly, from $60.3 billion to $149.3 billion, indicating growth in the equity base even after removing goodwill. The equity growth outpaces the asset growth rate, suggesting value creation retained by shareholders.

Financial Leverage

Reported financial leverage, calculated as the ratio of total assets to stockholders’ equity, has steadily declined from 2.8 in 2019 to 1.91 in 2024. This decline suggests a reduction in reliance on debt relative to equity, indicating a strengthening balance sheet and potentially lower financial risk. In contrast, adjusted financial leverage, which factors out goodwill, shows a decrease from 4.05 in 2019 to 2.49 in 2023, before slightly increasing to 2.63 in 2024. The lower leverage ratio when using reported figures compared to the adjusted ones highlights the impact of goodwill on capital structure analysis. The slight uptick in adjusted leverage in 2024 may warrant further investigation.

Overall Trends and Insights

The data reflects a consistent growth trajectory in both total assets and stockholders' equity, demonstrating financial expansion and an increasing shareholder value over time. The declining reported financial leverage indicates improved capital structure strength, though the adjusted leverage trends suggest the company maintains a higher leverage when goodwill is excluded. This highlights the importance of considering goodwill adjustments in financial analysis to obtain a comprehensive view of leverage and asset quality.

Stockholders’ Equity

Reported stockholders’ equity demonstrated a consistent upward trend from US$102,330 million in 2019 to US$268,477 million in 2024, indicating substantial growth in the company's total equity base over the six-year period. The adjusted stockholders’ equity, which accounts for goodwill adjustments, also exhibited a steady increase from US$60,304 million in 2019 to US$149,257 million in 2024, though the growth rate appears somewhat more moderate compared to the reported figures.

Return on Equity (ROE)

The reported ROE showed a high level of profitability throughout the period, starting at 38.35% in 2019 and peaking at 43.68% in 2022. However, it experienced a decline thereafter, falling to 35.09% in 2023 and further to 32.83% in 2024. This suggests a reduced efficiency in generating earnings from the reported equity in the most recent years.

The adjusted ROE, which considers equity after goodwill adjustments, was significantly higher than the reported ROE in every year. It started at 65.07% in 2019, reached a peak of 73.46% in 2022, before dropping to 52.31% in 2023, and then partially recovering to 59.05% in 2024. Despite the fluctuations, the adjusted ROE consistently indicates a very strong return relative to the smaller equity base excluding goodwill, suggesting that the company has maintained strong profitability on an adjusted equity basis.

Insights

The divergence between reported and adjusted stockholders’ equity highlights the considerable impact of goodwill on the company’s reported equity base. The consistently higher adjusted ROE compared to reported ROE underscores the dilutive effect of goodwill on the overall equity but also the robust earnings capacity relative to tangible equity. The recent decline in both reported and adjusted ROE points to a potential reduction in operational efficiency or profitability relative to equity, warranting closer examination of earnings quality and capital structure strategies.

The analysis of the financial data over the reported periods reveals several key trends regarding asset growth and return on assets (ROA), both on a reported and goodwill adjusted basis.

Total Assets

The reported total assets demonstrate a consistent upward trajectory over the six-year period, increasing from approximately $286.6 billion in mid-2019 to $512.2 billion by mid-2024. This represents a significant appreciation in the asset base, with notable acceleration in growth particularly after 2022.

Similarly, the adjusted total assets, which exclude goodwill, also show steady growth from $244.5 billion in 2019 to $392.9 billion in 2024. Although the adjusted figures remain below the reported totals, the increasing trend reflects enhanced operational asset accumulation or revaluation independent of goodwill.

Return on Assets (ROA)

Reported ROA percentage trends reflect an overall positive performance, beginning at 13.69% in 2019, rising to a peak of 19.94% in 2022, and then experiencing a slight decline to 17.21% by 2024. This indicates strong asset utilization efficiency with a peak period around 2021-2022, followed by a mild contraction in profitability relative to assets.

Adjusted ROA, which accounts for the exclusion of goodwill, starts higher than the reported ROA at 16.05% in 2019 and increases steadily to 24.46% in 2022. Despite a subsequent reduction, adjusted ROA remains at a robust 22.43% in 2024, consistently outperforming reported ROA. This suggests that when excluding goodwill, the underlying asset base achieves more effective returns, likely reflecting core business profitability without the distortion goodwill can introduce.

Overall, the data shows a solid expansion in asset values alongside strong returns on those assets. The adjustment for goodwill consistently raises the ROA, indicating that non-goodwill assets provide a higher margin of profitability. The peak in both reported and adjusted ROA around 2021-2022, followed by a moderate decline, may warrant further investigation into underlying operational changes or market conditions during that period.