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, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 36,908  16,308  27,455  25,696  12,237  24,071 
Invested capital2 87,753  76,697  76,799  48,394  41,216  47,350 
Performance Ratio
ROIC3 42.06% 21.26% 35.75% 53.10% 29.69% 50.84%
Benchmarks
ROIC, Competitors4
Adobe Inc. 19.74% 17.25% 22.06% 21.03% 11.74% 7.99%
Alphabet Inc. 32.75% 34.31% 19.71% 26.91% 22.22%
Autodesk Inc. 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. 34.72% 32.34% 36.84% 34.96% 28.34% 30.20%
Oracle Corp. 15.18% 5.88% 13.04% 15.80% 14.73%
salesforce.com inc. 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: 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), 10-K (filing date: 2014-07-31).

1 NOPAT. See details »

2 Invested capital. See details »

3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 36,908 ÷ 87,753 = 42.06%

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 deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Decomposition of ROIC

Microsoft Corp., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
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%
Jun 30, 2014 50.84% = 33.41% × 1.89 × 80.41%

Based on: 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), 10-K (filing date: 2014-07-31).

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 2019 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, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 36,908  16,308  27,455  25,696  12,237  24,071 
Add: Cash operating taxes2 10,807  24,571  4,701  2,558  5,889  5,864 
Net operating profit before taxes (NOPBT) 47,715  40,878  32,156  28,254  18,125  29,934 
 
Revenue 125,843  110,360  89,950  85,320  93,580  86,833 
Add: Increase (decrease) in unearned revenue 4,486  6,064  10,570  8,591  160  2,759 
Adjusted revenue 130,329  116,424  100,520  93,911  93,740  89,592 
Profitability Ratio
OPM3 36.61% 35.11% 31.99% 30.09% 19.34% 33.41%
Benchmarks
OPM, Competitors4
Adobe Inc. 31.93% 35.32% 33.91% 31.32% 24.23% 16.25%
Alphabet Inc. 23.20% 23.81% 24.25% 26.49% 25.64%
Autodesk Inc. 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. 28.32% 25.71% 28.07% 29.36% 24.51% 30.18%
Oracle Corp. 34.21% 35.42% 34.66% 35.32% 35.82%
salesforce.com inc. 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: 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), 10-K (filing date: 2014-07-31).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × 47,715 ÷ 130,329 = 36.61%

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 2017 to 2018 and from 2018 to 2019.

Turnover of Capital (TO)

Microsoft Corp., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in millions)
Revenue 125,843  110,360  89,950  85,320  93,580  86,833 
Add: Increase (decrease) in unearned revenue 4,486  6,064  10,570  8,591  160  2,759 
Adjusted revenue 130,329  116,424  100,520  93,911  93,740  89,592 
 
Invested capital1 87,753  76,697  76,799  48,394  41,216  47,350 
Efficiency Ratio
TO2 1.49 1.52 1.31 1.94 2.27 1.89
Benchmarks
TO, Competitors3
Adobe Inc. 0.67 0.61 0.77 0.77 0.66 0.62
Alphabet Inc. 1.61 1.58 1.69 1.25 1.05
Autodesk Inc. 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. 1.50 1.50 1.80 1.77 1.58 1.37
Oracle Corp. 0.55 0.55 0.49 0.58 0.57
salesforce.com inc. 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: 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), 10-K (filing date: 2014-07-31).

1 Invested capital. See details »

2 2019 Calculation
TO = Adjusted revenue ÷ Invested capital
= 130,329 ÷ 87,753 = 1.49

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 improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Effective Cash Tax Rate (CTR)

Microsoft Corp., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 36,908  16,308  27,455  25,696  12,237  24,071 
Add: Cash operating taxes2 10,807  24,571  4,701  2,558  5,889  5,864 
Net operating profit before taxes (NOPBT) 47,715  40,878  32,156  28,254  18,125  29,934 
Tax Rate
CTR3 22.65% 60.11% 14.62% 9.05% 32.49% 19.59%
Benchmarks
CTR, Competitors4
Adobe Inc. 7.06% 19.97% 15.15% 12.85% 26.06% 20.76%
Alphabet Inc. 12.46% 8.68% 52.04% 18.98% 17.49%
Autodesk Inc. 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. 18.38% 16.40% 27.07% 32.70% 26.75% 26.87%
Oracle Corp. 19.20% 70.01% 22.82% 22.47% 27.32%
salesforce.com inc. 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: 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), 10-K (filing date: 2014-07-31).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 10,807 ÷ 47,715 = 22.65%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Microsoft Corp.’s CTR increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.