Microsoft Corp. (NASDAQ:MSFT)

The financial data reveals several notable trends over the observed periods.

Market (fair) value of Microsoft

The market value exhibits a consistent upward trend, increasing from approximately 1.02 trillion US dollars in mid-2019 to over 3.17 trillion dollars by mid-2024. There is a particularly strong growth between 2022 and 2024, indicating a significant increase in market valuation despite a slight dip noted in 2022 compared to 2021.

Invested capital

Invested capital shows a steady and meaningful increase across the years, rising from about 96.4 billion US dollars in 2019 to approximately 351.6 billion in 2024. The growth accelerates notably from 2021 onwards, suggesting increased investments or asset base expansions that could be supporting business growth and market valuation increases.

Market value added (MVA)

MVA, representing the difference between market value and invested capital, also follows a pronounced upward trajectory. This indicator grows from roughly 928 billion US dollars in 2019 to around 2.83 trillion in 2024. The trend reflects strong value creation beyond the capital invested, although the rate of increase slightly moderates in 2022 before resuming a steep climb through 2024.

Overall, the data signals robust growth in value and capital investment, with market value and value added expanding at a rate that surpasses the rise in capital invested. This ratio suggests effective utilization of capital to generate shareholder value over the time frame analyzed.

The financial data demonstrates notable changes in the market value added (MVA), invested capital, and the MVA spread ratio over the analyzed periods.

Market Value Added (MVA)

The MVA exhibited a general upward trend from 2019 through 2024, starting at 927,883 million US dollars in mid-2019 and increasing to 2,825,515 million US dollars by mid-2024. The growth showcased significant increments particularly between 2019 and 2021, peaking in 2024.

Invested Capital

Invested capital increased steadily each year, more than tripling over the five-year span. It rose from 96,412 million US dollars in mid-2019 to 351,567 million US dollars in mid-2024. The pace of growth accelerated especially in the last two years, indicating increased capital investment in recent periods.

MVA Spread Ratio

The MVA spread ratio, which reflects the percentage return spread over invested capital, showed a declining trend after peaking in mid-2021. It started at a high value of 962.41% in 2019, increased further to 1,383.21% in 2021, then declined to 803.69% by mid-2024. Despite the decrease, the ratio remained substantially high, indicating strong value creation relative to invested capital.

Overall, the data reveals substantial growth in both market value added and invested capital, with the highest value creation efficiency occurring around 2020-2021. The subsequent decline in the spread ratio indicates that although invested capital increased markedly, the incremental value generated per unit of capital invested has moderated, suggesting a potential shift in the investment return dynamics in recent years.

The financial data reveals several important trends over the period analyzed, from June 30, 2019, through June 30, 2024. The focus is on Market Value Added (MVA), Adjusted Revenue, and the MVA margin, which collectively provide insight into the company's value creation relative to its revenue generation.

Market Value Added (MVA)

The MVA, expressed in US$ millions, shows a consistent upward trend over the six-year period. Starting at approximately 928 billion in mid-2019, it grew substantially to about 2.83 trillion by mid-2024. This represents more than a threefold increase, with noticeable acceleration particularly in the years ending 2021 and 2024. The increase in MVA indicates significant market confidence in the company’s ability to generate value beyond its capital cost.

Adjusted Revenue

Adjusted revenue also displayed continuous growth from approximately 130 billion US$ in 2019 to around 251 billion US$ in 2024. This increase was relatively steady year-over-year, reflecting strong top-line performance and expanding sales or service output. The revenue growth supports the rising market valuation and underlines strengthening operational performance.

MVA Margin

The MVA margin, representing the ratio of market value added to revenue expressed as a percentage, showed variability but generally remained strong throughout the period. It started at approximately 712% in 2019 and peaked above 1148% in 2021, suggesting periods during which the market value added significantly outpaced revenue growth. Although the margin dipped in 2022 to around 916%, it recovered to over 1123% by mid-2024. This trend indicates fluctuations in market efficiency or investor sentiment but consistently reflects a high level of value generation per revenue unit.

Overall, the data points to sustained growth in financial performance and market valuation. The increasing adjusted revenue aligns with, and supports, the expanding market value added. The elevated MVA margin levels suggest the company has been effectively converting its revenue growth into substantial shareholder value over the periods analyzed, despite minor fluctuations in market valuation efficiency.