Balance Sheet: Liabilities and Stockholders’ Equity

The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.

Liabilities represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity.

Microsoft Corp., consolidated balance sheet: liabilities and stockholders’ equity

US$ in millions

	Jun 30, 2026	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Accounts payable	42,416)	27,724)	21,996)	18,095)	19,000)	15,163)
Short-term debt	—)	—)	6,693)	—)	—)	—)
Current portion of long-term debt	9,227)	2,999)	2,249)	5,247)	2,749)	8,072)
Accrued compensation	14,945)	13,709)	12,564)	11,009)	10,661)	10,057)
Short-term income taxes	2,534)	7,211)	5,017)	4,152)	4,067)	2,174)
Short-term unearned revenue	72,965)	64,555)	57,582)	50,901)	45,538)	41,525)
Current finance lease liabilities	4,290)	3,172)	2,349)	1,197)	1,060)	791)
Other current liabilities	22,448)	21,848)	16,836)	13,548)	12,007)	10,875)
Current liabilities	168,825)	141,218)	125,286)	104,149)	95,082)	88,657)
Long-term debt, excluding current portion	31,067)	40,152)	42,688)	41,990)	47,032)	50,074)
Long-term income taxes	28,647)	25,986)	27,931)	25,560)	26,069)	27,190)
Long-term unearned revenue	2,747)	2,710)	2,602)	2,912)	2,870)	2,616)
Deferred income taxes	3,054)	2,835)	2,618)	433)	230)	198)
Long-term operating lease liabilities	16,532)	17,437)	15,497)	12,728)	11,489)	9,629)
Long-term finance lease liabilities	62,304)	43,000)	24,796)	15,870)	13,842)	11,750)
Other long-term liabilities	2,813)	2,186)	2,268)	2,111)	1,684)	1,677)
Long-term liabilities	147,164)	134,306)	118,400)	101,604)	103,216)	103,134)
Total liabilities	315,989)	275,524)	243,686)	205,753)	198,298)	191,791)
Common stock and paid-in capital	117,406)	109,095)	100,923)	93,718)	86,939)	83,111)
Retained earnings	328,265)	237,731)	173,144)	118,848)	84,281)	57,055)
Accumulated other comprehensive income (loss)	(3,284)	(3,347)	(5,590)	(6,343)	(4,678)	1,822)
Stockholders’ equity	442,387)	343,479)	268,477)	206,223)	166,542)	141,988)
Total liabilities and stockholders’ equity	758,376)	619,003)	512,163)	411,976)	364,840)	333,779)

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 balance sheet exhibits significant expansion between June 30, 2021, and June 30, 2026, with total liabilities and stockholders' equity increasing from 333,779 million US$ to 758,376 million US$. This growth is characterized by a simultaneous increase in operational obligations and a substantial accumulation of equity, reflecting a period of aggressive scaling.

Current Liabilities and Operational Obligations: Current liabilities rose from 88,657 million US$ in 2021 to 168,825 million US$ in 2026. A primary driver of this increase is short-term unearned revenue, which grew steadily from 41,525 million US$ to 72,965 million US$, suggesting a consistent increase in prepaid service contracts. Accounts payable also showed a significant upward trend, particularly accelerating between 2025 and 2026, where it increased from 27,724 million US$ to 42,416 million US$.
Long-Term Liability Structure: A strategic shift in financing is observable within long-term liabilities. Long-term debt, excluding the current portion, declined from 50,074 million US$ in 2021 to 31,067 million US$ in 2026. In contrast, long-term finance lease liabilities expanded dramatically from 11,750 million US$ to 62,304 million US$. This inverse relationship indicates a transition from traditional debt financing toward lease-based acquisition of long-term assets.
Equity Growth and Capital Retention: Stockholders' equity experienced rapid growth, increasing from 141,988 million US$ in 2021 to 442,387 million US$ in 2026. This expansion was driven predominantly by retained earnings, which grew from 57,055 million US$ to 328,265 million US$. This trajectory indicates high profitability and a strong capacity to retain earnings to fund internal growth. Common stock and paid-in capital also trended upward, moving from 83,111 million US$ to 117,406 million US$ over the same period.
Solvency and Leverage Analysis: While total liabilities increased by approximately 65% over the five-year period, stockholders' equity grew by more than 211%. This imbalance demonstrates a significant reduction in the debt-to-equity ratio, signaling a strengthened solvency position and a reduced reliance on external leverage. The overall financial structure shifted toward a more equity-heavy composition, providing a larger cushion against potential financial volatility.

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Microsoft Corp. (NASDAQ:MSFT)

Balance Sheet: Liabilities and Stockholders’ Equity