An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

Microsoft Corp., adjustments to financial statements

US$ in millions

	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Adjustment to Total Assets
Total assets (as reported)	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	—)	—)	—)	—)	—)	—)
Total assets (adjusted)	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)
Adjustment to Total Debt
Total debt (as reported)	106,888)	89,323)	78,775)	64,304)	64,683)	70,687)
Add: Operating lease liability (before adoption of FASB Topic 842)²	—)	—)	—)	—)	—)	—)
Add: Operating lease liabilities (included in Other current liabilities)	5,393)	5,424)	3,580)	2,409)	2,228)	1,962)
Add: Long-term operating lease liabilities	16,532)	17,437)	15,497)	12,728)	11,489)	9,629)
Total debt (adjusted)	128,813)	112,184)	97,852)	79,441)	78,400)	82,278)

Based on: 10-K (reporting date: 2026-06-30), 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).

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

Microsoft Corp., Financial Data: Reported vs. Adjusted

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Microsoft Corp., adjusted financial ratios

	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Total Asset Turnover¹
Reported total asset turnover	0.44	0.46	0.48	0.51	0.54	0.50
Adjusted total asset turnover	0.44	0.46	0.48	0.51	0.54	0.50
Debt to Equity²
Reported debt to equity	0.24	0.26	0.29	0.31	0.39	0.50
Adjusted debt to equity	0.29	0.33	0.36	0.39	0.47	0.58
Return on Assets³ (ROA)
Reported ROA	17.64%	16.45%	17.21%	17.56%	19.94%	18.36%
Adjusted ROA	17.64%	16.45%	17.21%	17.56%	19.94%	18.36%

Based on: 10-K (reporting date: 2026-06-30), 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).

¹ See details »

² See details »

³ See details »

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Microsoft Corp. adjusted total asset turnover ratio deteriorated from 2024 to 2025 and from 2025 to 2026.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Microsoft Corp. adjusted debt to equity ratio improved from 2024 to 2025 and from 2025 to 2026.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Microsoft Corp. adjusted ROA deteriorated from 2024 to 2025 but then improved from 2025 to 2026 exceeding 2024 level.

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

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	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
As Reported
Selected Financial Data (US$ in millions)
Revenue	331,839)	281,724)	245,122)	211,915)	198,270)	168,088)
Total assets	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)
Activity Ratio
Total asset turnover¹	0.44	0.46	0.48	0.51	0.54	0.50
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Revenue	331,839)	281,724)	245,122)	211,915)	198,270)	168,088)
Adjusted total assets	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)
Activity Ratio
Adjusted total asset turnover²	0.44	0.46	0.48	0.51	0.54	0.50

Based on: 10-K (reporting date: 2026-06-30), 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).

2026 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 331,839 ÷ 758,376 = 0.44

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 331,839 ÷ 758,376 = 0.44

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Microsoft Corp. adjusted total asset turnover ratio deteriorated from 2024 to 2025 and from 2025 to 2026.

	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
As Reported
Selected Financial Data (US$ in millions)
Total debt	106,888)	89,323)	78,775)	64,304)	64,683)	70,687)
Stockholders’ equity	442,387)	343,479)	268,477)	206,223)	166,542)	141,988)
Solvency Ratio
Debt to equity¹	0.24	0.26	0.29	0.31	0.39	0.50
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	128,813)	112,184)	97,852)	79,441)	78,400)	82,278)
Stockholders’ equity	442,387)	343,479)	268,477)	206,223)	166,542)	141,988)
Solvency Ratio
Adjusted debt to equity²	0.29	0.33	0.36	0.39	0.47	0.58

Based on: 10-K (reporting date: 2026-06-30), 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).

2026 Calculations

¹ Debt to equity = Total debt ÷ Stockholders’ equity
= 106,888 ÷ 442,387 = 0.24

² Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity
= 128,813 ÷ 442,387 = 0.29

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Microsoft Corp. adjusted debt-to-equity ratio improved from 2024 to 2025 and from 2025 to 2026.

	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
As Reported
Selected Financial Data (US$ in millions)
Net income	133,749)	101,832)	88,136)	72,361)	72,738)	61,271)
Total assets	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)
Profitability Ratio
ROA¹	17.64%	16.45%	17.21%	17.56%	19.94%	18.36%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income	133,749)	101,832)	88,136)	72,361)	72,738)	61,271)
Adjusted total assets	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)
Profitability Ratio
Adjusted ROA²	17.64%	16.45%	17.21%	17.56%	19.94%	18.36%

Based on: 10-K (reporting date: 2026-06-30), 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).

2026 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 133,749 ÷ 758,376 = 17.64%

² Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 133,749 ÷ 758,376 = 17.64%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Microsoft Corp. adjusted ROA deteriorated from 2024 to 2025 but then improved from 2025 to 2026 exceeding 2024 level.

Microsoft Corp. (NASDAQ:MSFT)

Analysis of Operating Leases

Adjustments to Financial Statements for Operating Leases

Microsoft Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios for Operating Leases (Summary)

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)