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

Microsoft Corp. (NASDAQ:MSFT)

Return on Capital (ROC)

Advanced level

Return on Invested Capital (ROIC)

Microsoft Corp., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 46,746  36,908  16,308  27,455  25,696  12,237 
Invested capital2 95,583  87,753  76,697  76,799  48,394  41,216 
Performance Ratio
ROIC3 48.91% 42.06% 21.26% 35.75% 53.10% 29.69%
Benchmarks
ROIC, Competitors4
Adobe Inc. 19.74% 17.25% 22.06% 21.03% 11.74%
Alphabet Inc. 32.75% 34.31% 19.71% 26.91% 22.22%
Autodesk Inc. 21.62% 0.93% -11.17% -9.45% 8.45% 10.16%
Facebook Inc. 27.51% 36.42% 37.03% 25.08% 9.26%
International Business Machines Corp. 7.84% 8.46% 5.77% 10.53% 13.69%
Intuit Inc. 20.58% 34.72% 32.34% 36.84% 34.96% 28.34%
Oracle Corp. 11.53% 15.18% 5.88% 13.04% 15.80% 14.73%
salesforce.com inc. 4.97% 8.95% 9.47% 7.75% 9.27% 6.61%
ServiceNow Inc. 19.88% 15.78% 15.89% -10.81% 0.75%

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 NOPAT. See details »

2 Invested capital. See details »

3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 46,746 ÷ 95,583 = 48.91%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Microsoft Corp.’s ROIC improved from 2018 to 2019 and from 2019 to 2020.

Decomposition of ROIC

Microsoft Corp., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Jun 30, 2020 48.91% = 38.29% × 1.52 × 84.20%
Jun 30, 2019 42.06% = 36.61% × 1.49 × 77.35%
Jun 30, 2018 21.26% = 35.11% × 1.52 × 39.89%
Jun 30, 2017 35.75% = 31.99% × 1.31 × 85.38%
Jun 30, 2016 53.10% = 30.09% × 1.94 × 90.95%
Jun 30, 2015 29.69% = 19.34% × 2.27 × 67.51%

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 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the increase in return on invested capital (ROIC) over 2020 year is the decrease in effective cash tax rate (CTR).


Operating Profit Margin (OPM)

Microsoft Corp., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 46,746  36,908  16,308  27,455  25,696  12,237 
Add: Cash operating taxes2 8,771  10,807  24,571  4,701  2,558  5,889 
Net operating profit before taxes (NOPBT) 55,517  47,715  40,878  32,156  28,254  18,125 
 
Revenue 143,015  125,843  110,360  89,950  85,320  93,580 
Add: Increase (decrease) in unearned revenue 1,974  4,486  6,064  10,570  8,591  160 
Adjusted revenue 144,989  130,329  116,424  100,520  93,911  93,740 
Profitability Ratio
OPM3 38.29% 36.61% 35.11% 31.99% 30.09% 19.34%
Benchmarks
OPM, Competitors4
Adobe Inc. 31.93% 35.32% 33.91% 31.32% 24.23%
Alphabet Inc. 23.20% 23.81% 24.25% 26.49% 25.64%
Autodesk Inc. 30.50% 3.88% -13.37% -9.48% 13.40% 12.87%
Facebook Inc. 34.36% 44.37% 49.93% 44.85% 34.99%
International Business Machines Corp. 16.43% 14.56% 16.13% 16.19% 19.65%
Intuit Inc. 29.33% 28.32% 25.71% 28.07% 29.36% 24.51%
Oracle Corp. 34.29% 34.21% 35.42% 34.66% 35.32% 35.82%
salesforce.com inc. 15.13% 18.93% 16.11% 15.00% 15.40% 11.86%
ServiceNow Inc. 14.97% 14.28% 13.97% -7.00% 2.38%

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 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × 55,517 ÷ 144,989 = 38.29%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Microsoft Corp.’s OPM improved from 2018 to 2019 and from 2019 to 2020.

Turnover of Capital (TO)

Microsoft Corp., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Selected Financial Data (US$ in millions)
Revenue 143,015  125,843  110,360  89,950  85,320  93,580 
Add: Increase (decrease) in unearned revenue 1,974  4,486  6,064  10,570  8,591  160 
Adjusted revenue 144,989  130,329  116,424  100,520  93,911  93,740 
 
Invested capital1 95,583  87,753  76,697  76,799  48,394  41,216 
Efficiency Ratio
TO2 1.52 1.49 1.52 1.31 1.94 2.27
Benchmarks
TO, Competitors3
Adobe Inc. 0.67 0.61 0.77 0.77 0.66
Alphabet Inc. 1.61 1.58 1.69 1.25 1.05
Autodesk Inc. 0.76 0.61 0.69 0.67 0.79 0.83
Facebook Inc. 1.08 0.93 0.98 0.71 0.57
International Business Machines Corp. 0.59 0.71 0.73 0.75 0.81
Intuit Inc. 0.89 1.50 1.50 1.80 1.77 1.58
Oracle Corp. 0.44 0.55 0.55 0.49 0.58 0.57
salesforce.com inc. 0.41 0.51 0.63 0.57 0.70 0.65
ServiceNow Inc. 1.36 1.18 1.24 1.33 1.14

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 Invested capital. See details »

2 2020 Calculation
TO = Adjusted revenue ÷ Invested capital
= 144,989 ÷ 95,583 = 1.52

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Microsoft Corp.’s TO deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Effective Cash Tax Rate (CTR)

Microsoft Corp., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 46,746  36,908  16,308  27,455  25,696  12,237 
Add: Cash operating taxes2 8,771  10,807  24,571  4,701  2,558  5,889 
Net operating profit before taxes (NOPBT) 55,517  47,715  40,878  32,156  28,254  18,125 
Tax Rate
CTR3 15.80% 22.65% 60.11% 14.62% 9.05% 32.49%
Benchmarks
CTR, Competitors4
Adobe Inc. 7.06% 19.97% 15.15% 12.85% 26.06%
Alphabet Inc. 12.46% 8.68% 52.04% 18.98% 17.49%
Autodesk Inc. 6.38% 60.79% 20.47% 5.36%
Facebook Inc. 25.67% 11.36% 24.12% 21.75% 53.24%
International Business Machines Corp. 18.55% 18.30% 51.29% 13.24% 13.55%
Intuit Inc. 21.07% 18.38% 16.40% 27.07% 32.70% 26.75%
Oracle Corp. 23.42% 19.20% 70.01% 22.82% 22.47% 27.32%
salesforce.com inc. 19.76% 7.48% 7.21% 9.36% 13.59% 14.02%
ServiceNow Inc. 2.51% 6.49% 8.20% 72.30%

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 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 8,771 ÷ 55,517 = 15.80%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Microsoft Corp.’s CTR decreased from 2018 to 2019 and from 2019 to 2020.