Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Microsoft Corp. (NASDAQ:MSFT)

Analysis of Investments

Advanced level

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Microsoft Corp., adjustment to net income

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Net income (as reported) 44,281  39,240  16,571  21,204  16,798  12,193 
Add: Net change related to investments 3,990  2,405  (2,717) (1,116) (228) (362)
Net income (adjusted) 48,271  41,645  13,854  20,088  16,570  11,831 

Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31).


Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)

Microsoft Corp., adjusted profitability ratios

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Net Profit Margin
Reported net profit margin 30.96% 31.18% 15.02% 23.57% 19.69% 13.03%
Adjusted net profit margin 33.75% 33.09% 12.55% 22.33% 19.42% 12.64%
Return on Equity (ROE)
Reported ROE 37.43% 38.35% 20.03% 29.29% 23.33% 15.23%
Adjusted ROE 40.80% 40.70% 16.75% 27.75% 23.01% 14.77%
Return on Assets (ROA)
Reported ROA 14.70% 13.69% 6.40% 8.80% 8.67% 6.92%
Adjusted ROA 16.02% 14.53% 5.35% 8.33% 8.55% 6.71%

Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31).

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Microsoft Corp.’s adjusted net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Microsoft Corp.’s adjusted ROE improved from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Microsoft Corp.’s adjusted ROA improved from 2018 to 2019 and from 2019 to 2020.

Microsoft Corp., Profitability Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 44,281  39,240  16,571  21,204  16,798  12,193 
Revenue 143,015  125,843  110,360  89,950  85,320  93,580 
Profitability Ratio
Net profit margin1 30.96% 31.18% 15.02% 23.57% 19.69% 13.03%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 48,271  41,645  13,854  20,088  16,570  11,831 
Revenue 143,015  125,843  110,360  89,950  85,320  93,580 
Profitability Ratio
Adjusted net profit margin2 33.75% 33.09% 12.55% 22.33% 19.42% 12.64%

Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31).

2020 Calculations

1 Net profit margin = 100 × Net income ÷ Revenue
= 100 × 44,281 ÷ 143,015 = 30.96%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 48,271 ÷ 143,015 = 33.75%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Microsoft Corp.’s adjusted net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 44,281  39,240  16,571  21,204  16,798  12,193 
Stockholders’ equity 118,304  102,330  82,718  72,394  71,997  80,083 
Profitability Ratio
ROE1 37.43% 38.35% 20.03% 29.29% 23.33% 15.23%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 48,271  41,645  13,854  20,088  16,570  11,831 
Stockholders’ equity 118,304  102,330  82,718  72,394  71,997  80,083 
Profitability Ratio
Adjusted ROE2 40.80% 40.70% 16.75% 27.75% 23.01% 14.77%

Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31).

2020 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 44,281 ÷ 118,304 = 37.43%

2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × 48,271 ÷ 118,304 = 40.80%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Microsoft Corp.’s adjusted ROE improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 44,281  39,240  16,571  21,204  16,798  12,193 
Total assets 301,311  286,556  258,848  241,086  193,694  176,223 
Profitability Ratio
ROA1 14.70% 13.69% 6.40% 8.80% 8.67% 6.92%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 48,271  41,645  13,854  20,088  16,570  11,831 
Total assets 301,311  286,556  258,848  241,086  193,694  176,223 
Profitability Ratio
Adjusted ROA2 16.02% 14.53% 5.35% 8.33% 8.55% 6.71%

Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 44,281 ÷ 301,311 = 14.70%

2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × 48,271 ÷ 301,311 = 16.02%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Microsoft Corp.’s adjusted ROA improved from 2018 to 2019 and from 2019 to 2020.