Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Microsoft Corp., common-size consolidated balance sheet: liabilities and stockholders’ equity
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).
The capital structure exhibits a consistent shift from liability-based financing toward equity-based financing over the observed period. Total liabilities have decreased steadily from 57.46% in 2021 to 41.67% in 2026, while stockholders' equity has expanded from 42.54% to 58.33% of the total balance sheet. This trajectory indicates a strengthening of the solvency position and a reduction in overall financial leverage.
- Liability Composition and Trends
- Current liabilities show a gradual contraction, moving from 26.56% to 22.26%. A primary driver of this decline is the reduction in short-term unearned revenue, which fell from 12.44% to 9.62%. Long-term liabilities experienced a more pronounced decrease, dropping from 30.90% to 19.41%. This is largely attributed to a significant reduction in long-term debt, which fell from 15.00% to 4.10%.
- Conversely, long-term finance lease liabilities have trended upward, increasing from 3.52% in 2021 to 8.22% in 2026, suggesting a strategic shift toward leasing arrangements for long-term assets.
- Equity Component Evolution
- The composition of stockholders' equity has undergone a substantial transformation. Retained earnings have grown aggressively, increasing from 17.09% to 43.29% of total liabilities and stockholders' equity. This suggests strong internal capital generation and profit retention.
- Simultaneously, common stock and paid-in capital have decreased from 24.90% to 15.48%, indicating that earned capital is becoming the dominant driver of the equity base over contributed capital. Accumulated other comprehensive income remained negative for most of the period, though it showed a recovery trend from a low of -1.54% in 2023 to -0.43% by 2026.
The overall financial profile is characterized by a deliberate deleveraging process and a transition toward an organically funded balance sheet. The marked increase in retained earnings relative to the decrease in long-term debt underscores a transition toward higher financial autonomy and lower reliance on external creditors.