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

Microsoft Corp. (NASDAQ:MSFT)

Analysis of Operating Leases

Advanced level

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Microsoft Corp., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Total undiscounted future operating lease payments 7,872  6,464  5,153 
Discount rate1 2.95% 2.56% 2.71%
 
Total present value of future operating lease payments 6,980  5,816  4,627 

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).

1 Weighted-average interest rate for Microsoft Corp.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.95%
2018 1,292  2018 1,292  1,255 
2019 1,220  2019 1,220  1,151 
2020 1,115  2020 1,115  1,022 
2021 908  2021 908  808 
2022 749  2022 749  648 
2023 and thereafter 2,588  2023 749  629 
2024 749  611 
2025 749  594 
2026 341  262 
Total: 7,872  7,872  6,980 

Based on: 10-K (filing date: 2017-08-02).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.56%
2017 961  2017 961  937 
2018 996  2018 996  947 
2019 922  2019 922  855 
2020 833  2020 833  753 
2021 634  2021 634  559 
2022 and thereafter 2,118  2022 634  545 
2023 634  531 
2024 634  518 
2025 216  172 
Total: 6,464  6,464  5,816 

Based on: 10-K (filing date: 2016-07-28).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.71%
2016 863  2016 863  840 
2017 803  2017 803  761 
2018 735  2018 735  678 
2019 611  2019 611  549 
2020 524  2020 524  458 
2021 and thereafter 1,617  2021 524  446 
2022 524  435 
2023 524  423 
2024 45  35 
Total: 5,153  5,153  4,627 

Based on: 10-K (filing date: 2015-07-31).


Adjustments to Financial Statements for Operating Leases

Microsoft Corp., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Adjustment to Total Assets
Total assets (as reported) 301,311  286,556  258,848  241,086  193,694  176,223 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  —  —  6,980  5,816  4,627 
Total assets (adjusted) 301,311  286,556  258,848  248,066  199,510  180,850 
Adjustment to Total Debt
Total debt (as reported) 63,327  72,178  76,240  86,194  53,687  35,292 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  —  —  6,980  5,816  4,627 
Add: Operating lease liabilities (included in Other current liabilities) 1,616  1,515  1,399  —  —  — 
Add: Long-term operating lease liabilities 7,671  6,188  5,568  —  —  — 
Total debt (adjusted) 72,614  79,881  83,207  93,174  59,503  39,919 

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).

1, 2 Equal to total present value of future operating lease payments.


Microsoft Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Microsoft Corp., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Total Asset Turnover1
Reported total asset turnover 0.47 0.44 0.43 0.37 0.44 0.53
Adjusted total asset turnover 0.47 0.44 0.43 0.36 0.43 0.52
Debt to Equity2
Reported debt to equity 0.54 0.71 0.92 1.19 0.75 0.44
Adjusted debt to equity 0.61 0.78 1.01 1.29 0.83 0.50
Return on Assets3 (ROA)
Reported ROA 14.70% 13.69% 6.40% 8.80% 8.67% 6.92%
Adjusted ROA 14.70% 13.69% 6.40% 8.55% 8.42% 6.74%

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).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Microsoft Corp.’s adjusted total asset turnover ratio improved from 2018 to 2019 and from 2019 to 2020.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Microsoft Corp.’s adjusted debt to equity ratio improved from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Microsoft Corp.’s adjusted ROA improved from 2018 to 2019 and from 2019 to 2020.

Microsoft Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

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)
Revenue 143,015  125,843  110,360  89,950  85,320  93,580 
Total assets 301,311  286,556  258,848  241,086  193,694  176,223 
Activity Ratio
Total asset turnover1 0.47 0.44 0.43 0.37 0.44 0.53
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Revenue 143,015  125,843  110,360  89,950  85,320  93,580 
Adjusted total assets 301,311  286,556  258,848  248,066  199,510  180,850 
Activity Ratio
Adjusted total asset turnover2 0.47 0.44 0.43 0.36 0.43 0.52

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 Total asset turnover = Revenue ÷ Total assets
= 143,015 ÷ 301,311 = 0.47

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 143,015 ÷ 301,311 = 0.47

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Microsoft Corp.’s adjusted total asset turnover ratio improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Debt to Equity

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)
Total debt 63,327  72,178  76,240  86,194  53,687  35,292 
Stockholders’ equity 118,304  102,330  82,718  72,394  71,997  80,083 
Solvency Ratio
Debt to equity1 0.54 0.71 0.92 1.19 0.75 0.44
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 72,614  79,881  83,207  93,174  59,503  39,919 
Stockholders’ equity 118,304  102,330  82,718  72,394  71,997  80,083 
Solvency Ratio
Adjusted debt to equity2 0.61 0.78 1.01 1.29 0.83 0.50

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 Debt to equity = Total debt ÷ Stockholders’ equity
= 63,327 ÷ 118,304 = 0.54

2 Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity
= 72,614 ÷ 118,304 = 0.61

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Microsoft Corp.’s adjusted debt-to-equity ratio 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 for Operating Leases
Selected Financial Data (US$ in millions)
Net income 44,281  39,240  16,571  21,204  16,798  12,193 
Adjusted total assets 301,311  286,556  258,848  248,066  199,510  180,850 
Profitability Ratio
Adjusted ROA2 14.70% 13.69% 6.40% 8.55% 8.42% 6.74%

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 × Net income ÷ Adjusted total assets
= 100 × 44,281 ÷ 301,311 = 14.70%

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