Analysis of Investments
Paying user area
Try for free
Microsoft Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
- Aggregate Accruals
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Microsoft Corp. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Microsoft Corp., adjustment to net income
US$ in millions
| 12 months ended: | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|---|
| Net income (as reported) | |||||||
| Add: Net change related to investments | |||||||
| Net income (adjusted) |
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 and adjusted net income over the given periods reveals several significant trends and insights.
- Reported Net Income
- The reported net income has demonstrated a consistent upward trajectory from June 30, 2020, through June 30, 2025. Starting at 44,281 million US dollars in 2020, it increased sharply to 61,271 million in 2021 and continued rising to 72,738 million in 2022. The figure remained relatively stable between 2022 and 2023 at approximately 72,361 million, before experiencing significant growth in 2024 and 2025, reaching 88,136 million and 101,832 million respectively. This overall trend indicates strong profitability and growth momentum within the company.
- Adjusted Net Income
- The adjusted net income series also displays growth over the same periods but with a slightly different pattern. Beginning at 48,271 million US dollars in 2020, it decreased to 59,005 million in 2021, then showed moderate growth in 2022 and 2023, with values of 67,378 million and 70,917 million respectively. From 2023 onward, the adjusted net income accelerated significantly to 89,093 million in 2024 and 103,406 million in 2025. This progression suggests effective adjustments that may reflect non-recurring items or other factors impacting reported earnings, aligning closely with reported net income especially in the latter years.
- Comparison and Insights
- Notably, the adjusted net income is generally higher than the reported net income in most years except 2021, where reported income surpassed the adjusted figure. The gap between the two measures narrows over time, indicating increased alignment of adjusted metrics with the reported results. The rapid growth observed particularly from 2023 onwards in both measures underscores improving operational performance or favorable accounting adjustments.
- Overall, the data conveys a positive growth narrative, reflecting robust financial health and effective earnings management practices. The close correlation and upward trends in both reported and adjusted net incomes highlight sustained profitability and the potential for ongoing value creation.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Microsoft Corp., adjusted profitability ratios
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).
- Net Profit Margin
- The reported net profit margin displayed an overall upward trend from 30.96% in 2020 to 36.15% in 2025, with a notable peak of 36.69% in 2022 followed by a slight dip in 2023 before recovering in subsequent years. The adjusted net profit margin exhibited a similar pattern, increasing from 33.75% in 2020 to 36.7% in 2025. The adjusted figures remained consistently higher than the reported margins until 2024, where the two measures converged closely. This suggests effective cost management and profitability improvements, with adjustments reflecting a somewhat smoother performance trajectory.
- Return on Equity (ROE)
- Reported ROE showed strong performance initially, rising from 37.43% in 2020 to a peak of 43.68% in 2022. However, it experienced a notable decline thereafter, dropping steadily to 29.65% by 2025. Adjusted ROE followed a parallel pattern, peaking at 41.56% in 2021 and decreasing thereafter to 30.11% in 2025. The decrease in both reported and adjusted ROE in later years indicates diminishing returns to shareholders, possibly due to increased equity base or reduced net income growth relative to equity.
- Return on Assets (ROA)
- Reported ROA increased from 14.7% in 2020 to 19.94% in 2022, signaling enhanced efficiency in asset utilization. Following 2022, reported ROA declined moderately to 16.45% in 2025. Adjusted ROA exhibited a similar trend, rising from 16.02% in 2020 to 18.47% in 2022, then decreasing slightly to 16.71% in 2025. The overall trend suggests initial improvement in asset productivity followed by a tapering off or modest decline in later periods.
- Overall Trends and Insights
- The data reveals that profitability metrics such as net profit margin remained relatively stable with slight improvements over the period, demonstrating consistent operational profitability. In contrast, returns denominated by equity and assets peaked around 2021–2022 and declined thereafter, which may indicate challenges in maintaining high-growth returns amid expanding asset and equity bases or other operational factors. Adjusted financial metrics generally parallel reported numbers but exhibit less volatility, suggesting the adjustments smooth out temporary or non-operational influences on performance.
Microsoft Corp., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
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).
2025 Calculations
1 Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × ÷ =
The analysis of the net income and profit margin data over the reported periods reveals several noteworthy trends in financial performance.
- Net Income Trends
-
Reported net income exhibits a consistent upward trajectory from US$44,281 million in 2020 to US$101,832 million projected for 2025. The increase is substantial, more than doubling over the six-year span. Notably, there is an acceleration in growth between 2023 and 2025, with reported net income rising from approximately US$72,361 million to over US$100,000 million.
Adjusted net income follows a somewhat similar ascending pattern, rising from US$48,271 million in 2020 to an estimated US$103,406 million in 2025. The adjustment narrows the difference between reported and adjusted figures over time, with adjusted net income beginning higher than reported in earlier years but both measures converging in the later periods, particularly noticeable from 2023 onwards.
- Net Profit Margin Patterns
-
The reported net profit margin remains relatively stable with slight fluctuations. It rises from 30.96% in 2020 to peak at 36.69% in 2022, dips in 2023 to 34.15%, but rebounds to 36.15% by 2025. This stability after initial gains suggests effective control over costs relative to revenues while maintaining profitability.
Adjusted net profit margin shows a similar, though more moderated, trend. Starting at 33.75% in 2020, it climbs to 35.10% in 2021 but declines slightly to 33.46% by 2023 before experiencing a significant increase to 36.70% projected in 2025. The adjustment-related margins indicate that non-recurring or investment-related items may have influenced the mid-period dip and the strong recovery thereafter.
Overall, the data indicate strong and sustained growth in both reported and adjusted net income along with generally stable to improving net profit margins. The improvement in profitability metrics towards the end of the period suggests enhanced operational efficiency or favorable revenue growth dynamics. The convergence of adjusted and reported figures in later years also implies reduced volatility from investment adjustments.
Adjusted Return on Equity (ROE)
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).
2025 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × ÷ =
The financial data reveals distinct patterns in the company's profitability and return on equity over the examined period from June 30, 2020, to June 30, 2025.
- Net Income Trends
- Reported net income shows a consistent upward trajectory, increasing from 44,281 million US dollars in 2020 to 101,832 million US dollars in 2025. This indicates a strong growth in absolute profitability over the six-year span. Adjusted net income follows a similar growth pattern, rising from 48,271 million US dollars in 2020 to 103,406 million US dollars in 2025. Despite minor fluctuations, the overall increase under both reported and adjusted figures suggests robust underlying earnings performance.
- Return on Equity (ROE) Trends
- Both reported and adjusted return on equity percentages exhibit a declining trend in the same period. Reported ROE decreases from 37.43% in 2020 to 29.65% in 2025, while adjusted ROE decreases from 40.8% to 30.11% over the same period. This reduction in ROE may imply that equity growth is outpacing net income growth, or changes in capital structure affecting equity efficiency.
- Comparison Between Reported and Adjusted Measures
- Adjusted net income figures are generally higher than reported net income in the earlier years but converge closely from 2023 onwards. Adjusted ROE values are consistently higher than the reported ones across all years, indicating adjustments account for factors that positively influence equity returns. However, both measures reveal the same declining trend in ROE over time, reinforcing the observation that profitability relative to equity is diminishing despite rising absolute earnings.
Adjusted Return on Assets (ROA)
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).
2025 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
The financial data reveals a consistent increase in both reported and adjusted net income over the six-year period ending in June 30, 2025. Reported net income increased from 44,281 million US dollars in 2020 to 101,832 million US dollars in 2025, reflecting a strong upward growth trajectory. Similarly, adjusted net income showed a steady rise from 48,271 million US dollars in 2020 to 103,406 million US dollars in 2025, indicating a comparable growth pattern when investment adjustments are considered.
Regarding profitability as measured by Return on Assets (ROA), the reported ROA initially experienced growth, rising from 14.7% in 2020 to a peak of 19.94% in 2022. However, subsequent years saw a decline in reported ROA to 16.45% by 2025, suggesting a reduction in asset efficiency or increased asset base relative to net income after 2022.
The adjusted ROA followed a similar trajectory, increasing from 16.02% in 2020 to 18.47% in 2022 before declining to 16.71% in 2025. Notably, the adjusted ROA values are consistently higher than the reported ROA in the early years but converge closer in the later periods, which may reflect changes in investment adjustments or operational efficiency.
Overall, net income has shown substantial growth over the period, while asset profitability exhibited an improvement until 2022 followed by a modest decline through 2025. The data suggest that while earnings capability has increased, the effectiveness of asset utilization experienced a peak and then a decrease in recent years, indicating potential shifts in asset management strategy or market conditions.
- Net Income Trends
- Both reported and adjusted net income increased consistently from 2020 to 2025, more than doubling over the period.
- Return on Assets (ROA) Trends
- Reported and adjusted ROA improved significantly through 2022 but declined thereafter, indicating fluctuating asset efficiency.
- Comparison Between Reported and Adjusted Figures
- Adjusted net income and ROA were generally higher than reported figures initially but approached similar levels by 2025.
- Insights
- Strong income growth coupled with a decline in asset profitability post-2022 may warrant further analysis of asset utilization and investment strategies.