Microsoft Corp. (NASDAQ:MSFT)

Total Asset Turnover

The reported total asset turnover ratio increased from 0.47 in 2020 to a peak of 0.54 in 2022, followed by a gradual decline to 0.46 by 2025. Similarly, the adjusted total asset turnover ratio showed an upward trend reaching 0.58 in 2022, before decreasing to 0.49 in 2025. This indicates an initial improvement in asset utilization efficiency which modestly reversed in later years.

Current Ratio

The reported current ratio declined consistently from 2.52 in 2020 to 1.27 in 2024, with a slight increase to 1.35 in 2025, suggesting a weakening liquidity position over the period, though showing minor stabilization towards the end. The adjusted current ratio, which started higher at 5.03 in 2020, followed a similar decreasing pattern down to 2.37 in 2024, with a small recovery to 2.51 in 2025, indicating an overall reduction in short-term liquidity despite the adjustments.

Debt to Equity Ratio

The reported debt to equity ratio exhibited a steady decline from 0.62 in 2020 to 0.26 in 2025, signaling a gradual reduction in financial leverage and reliance on debt financing. The adjusted figures mirrored this trend, falling from 0.54 to 0.29 over the same period, reflecting a consistent de-risking of capital structure.

Debt to Capital Ratio

Both reported and adjusted debt to capital ratios decreased gradually, with reported values declining from 0.38 to 0.21 and adjusted values from 0.35 to 0.23 between 2020 and 2025. This supports the observation of diminishing debt levels relative to total capital employed in the business.

Financial Leverage

The reported financial leverage ratio reduced from 2.55 in 2020 to 1.80 in 2025, indicating a lower dependence on borrowed funds relative to equity. Adjusted financial leverage showed a similar downward trend from 1.94 to 1.53 during the same timeframe, reflecting a stronger equity base and less financial risk.

Net Profit Margin

The reported net profit margin improved from 30.96% in 2020, reaching a high of 36.69% in 2022, then plateauing around 36% in 2024 and 2025. The adjusted net profit margin also rose initially but showed some fluctuation, decreasing in 2022 and 2023 before returning close to 36% in the last two years, which suggests a generally robust profitability with some variability when adjustments are considered.

Return on Equity (ROE)

Reported ROE increased from 37.43% in 2020 to a peak of 43.68% in 2022 but then declined steadily to 29.65% by 2025. Adjusted ROE showed a downward trend from 32.99% to 27.04%, indicating that despite high profitability, the efficiency in generating returns for shareholders diminished over the recent years.

Return on Assets (ROA)

The reported ROA improved notably from 14.7% in 2020 to 19.94% in 2022 but decreased thereafter to 16.45% in 2025. The adjusted ROA remained relatively stable, around 17-19%, with a slight improvement towards the end of the period, suggesting effective asset utilization though with some recent moderation in returns.

The financial data reveals a consistent upward trend in revenue over the examined periods. Revenue increased steadily from US$143,015 million in mid-2020 to an estimated US$281,724 million by mid-2025. This growth is mirrored in adjusted revenue figures, which also show a parallel upward trajectory, indicating possible refinements in revenue calculation but maintaining the overall growth pattern.

Total assets demonstrate a significant expansion throughout the period. Starting at US$301,311 million in 2020, total assets are projected to more than double by 2025, reaching US$619,003 million. The adjusted total assets show a similarly increasing trend, though slightly lower in absolute terms compared to the reported totals, suggesting the adjustments likely account for refinements in asset valuation or classification.

Turning to asset turnover ratios, both reported and adjusted total asset turnover exhibit a declining trend after an initial increase. The reported total asset turnover rose from 0.47 in 2020 to a peak of 0.54 in 2022, followed by a gradual decline to 0.46 in 2025. Adjusted total asset turnover shows a comparable trend, peaking at 0.58 in 2022 before decreasing to 0.49 in 2025. This pattern indicates that while revenue and assets are growing, the efficiency with which assets generate revenue is diminishing in the latter years. This could be attributed to a more rapid increase in asset base relative to revenue growth or shifts in operational dynamics.

Overall, the data indicates strong growth in both revenue and asset size over the five-year horizon. The slight decline in asset turnover ratios after a mid-period peak suggests a potential reduction in asset utilization efficiency, which may warrant further investigation to ensure long-term value creation and operational effectiveness.

Revenue Growth

Steady increase from US$143,015 million to US$281,724 million over five years.

Adjusted revenue aligns closely, supporting robustness of the growth trend.

Total Assets Expansion

Total assets more than double, rising from US$301,311 million to US$619,003 million.

Adjusted total assets follow a similar upward trend, slightly lower than reported figures.

Asset Turnover Efficiency

Reported turnover increased initially, peaking in 2022 at 0.54, then declined to 0.46 by 2025.

Adjusted turnover shows a comparable pattern, peaking at 0.58 before dropping to 0.49.

The decline suggests reduced efficiency in converting assets to revenue in recent years.

The analyzed financial data reveals notable trends in the liquidity position over a six-year period.

Current Assets

The current assets show some fluctuation throughout the years. Initially, there was a slight increase from 181,915 million US dollars in 2020 to 184,406 million in 2021, followed by a decline to 169,684 million in 2022. This was succeeded by a recovery to 184,257 million in 2023, then another drop to 159,734 million in 2024 before rising again to 191,131 million in 2025. Overall, current assets display a cyclical pattern rather than a consistent trend.

Current Liabilities

Current liabilities exhibit a steady upward trajectory during the period analyzed, increasing from 72,310 million US dollars in 2020 to 141,218 million in 2025. This steady growth indicates progressively higher short-term obligations or payables over the years.

Reported Current Ratio

The reported current ratio declines consistently from 2.52 in 2020 to 1.27 in 2024, showing a weakening in short-term liquidity when comparing current assets to current liabilities. There is a slight recovery to 1.35 in 2025, but the overall trend suggests diminishing liquidity coverage based on reported figures.

Adjusted Current Assets

Adjusted current assets mirror the trend observed in reported current assets but show slightly higher values each year. These start at 182,703 million in 2020 and fluctuate similarly with a decline after 2021, recovering in 2023, a dip in 2024, and a rise in 2025, reaching 192,075 million.

Adjusted Current Liabilities

Adjusted current liabilities are significantly lower than reported current liabilities and show a clear but more moderate increase from 36,310 million in 2020 to 76,663 million in 2025. The adjustments imply that some liabilities may have been excluded or reclassified, resulting in better relative liquidity under this metric.

Adjusted Current Ratio

The adjusted current ratio also decreases from 5.03 in 2020 to 2.37 in 2024, indicating a decline in liquidity but remaining at levels indicative of ample short-term coverage. A modest increase to 2.51 in 2025 suggests a slight improvement in the adjusted liquidity position. Despite the decline, the adjusted ratios remain substantially higher than the reported ratios, highlighting the impact of adjustments on liquidity assessment.

In summary, while current liabilities have increased steadily, current assets have fluctuated, leading to a weakening trend in the reported current ratio. The adjusted metrics present a more favorable liquidity position, with higher ratios reflecting less severe declines. This divergence suggests that the adjustments play a critical role in understanding the company’s short-term financial health, and the liquidity position, although weaker than at the start, remains adequately controlled according to the adjusted figures.

The financial data reveals distinct trends concerning the company's debt levels, equity base, and leverage ratios over the examined periods from mid-2020 to mid-2025.

Total Debt

Total debt shows a general decline from $72,823 million in mid-2020 to $64,304 million in mid-2023. However, from mid-2023 onwards, there is a notable increase rising to $89,323 million by mid-2025, marking a significant upward trend in recent years.

Stockholders’ Equity

Stockholders’ equity demonstrates a consistent and substantial growth trend throughout the entire timeframe. Starting at $118,304 million in mid-2020, it escalates steadily each year, culminating at $343,479 million in mid-2025, nearly tripling over five years.

Reported Debt to Equity Ratio

The reported debt to equity ratio experiences a steady decline across the years, falling from 0.62 in mid-2020 to 0.26 in mid-2025. This indicates a decreasing reliance on debt relative to the equity base, highlighting strengthening financial stability according to this metric.

Adjusted Total Debt

Adjusted total debt remains relatively stable from mid-2020 ($82,110 million) through mid-2023 ($79,441 million), though slightly decreasing. However, similar to total debt, it increases markedly afterward, reaching $112,184 million by mid-2025.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity also consistently grows, from $152,071 million in mid-2020 to $385,415 million in mid-2025, reflecting a robust increase consistent with the pattern observed in the unadjusted equity figures.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio declines over the period from 0.54 in mid-2020 to 0.29 in mid-2025. The trend mirrors the reported ratio but remains slightly higher throughout, indicating that even on an adjusted basis, the company is reducing its leverage relative to equity.

In summary, the company has demonstrated consistent growth in equity, enhancing its capital base significantly year over year. While total and adjusted debt experienced a decline in the early years followed by a rising trend in recent periods, leverage ratios have steadily decreased, suggesting an improved capital structure and potentially stronger creditworthiness despite the recent debt uptick. The firm's overall financial profile indicates a strategic balance between financing through debt and equity with a clear bias toward strengthening equity levels and lowering leverage ratios over the medium term.

Total Debt

The total debt initially decreased from 72,823 million USD as of June 30, 2020 to 64,304 million USD as of June 30, 2023, showing a declining trend over these four years. However, from June 30, 2023 onwards, the total debt reversed course and increased steadily, reaching 89,323 million USD by June 30, 2025.

Total Capital

Total capital consistently increased throughout the entire period under review. Starting at 191,127 million USD on June 30, 2020, total capital grew steadily each year, reaching 432,802 million USD by June 30, 2025. This represents strong capital base expansion over the six-year horizon.

Reported Debt to Capital Ratio

The reported debt to capital ratio demonstrated a clear declining trend over the observed period. The ratio fell from 0.38 in mid-2020 to 0.21 in mid-2025, indicating a relative reduction in debt compared to the growing capital, reflecting an improvement in the company’s leverage position when measured on reported debt and capital.

Adjusted Total Debt

Adjusted total debt remained relatively stable from June 30, 2020 to June 30, 2023, fluctuating mildly around 78,000 to 82,000 million USD. Starting from June 30, 2023, it increased notably to 112,184 million USD by June 30, 2025, mirroring the trend seen in reported total debt but at a higher level due to adjustments.

Adjusted Total Capital

Adjusted total capital consistently rose over the entire period, starting at 234,181 million USD in mid-2020 and increasing to 497,599 million USD by mid-2025. This upward movement is coherent with the total capital trend but on a higher adjusted basis.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio decreased steadily from 0.35 in June 2020 to 0.23 by June 2025. Despite the increase in adjusted total debt after 2023, the ratio improvement suggests that adjusted capital grew at a faster pace than adjusted debt, indicating a strengthening financial structure on this metric as well.

The data reveals significant growth trends across all examined financial metrics over the periods.

Total assets

Total assets have shown a consistent upward trajectory, increasing from $301,311 million in 2020 to $619,003 million in 2025. This represents more than a doubling over the five-year span, indicating substantial asset expansion and capital investment.

Stockholders’ equity

Stockholders’ equity has also followed a strong growth pattern, rising from $118,304 million in 2020 to $343,479 million in 2025. The growth rate outpaces that of total assets, suggesting enhanced value retention and strengthened equity base.

Reported financial leverage

The reported financial leverage ratio has steadily decreased from 2.55 in 2020 to 1.8 in 2025. This downward trend indicates a reduction in the use of debt relative to equity, implying an improving financial risk profile and potentially greater financial stability.

Adjusted total assets

Adjusted total assets, which may account for certain valuation or accounting adjustments, also show an increasing trend from $295,694 million in 2020 to $590,839 million in 2025. The growth rate is consistent with that of reported total assets, reinforcing the overall asset expansion.

Adjusted stockholders’ equity

Adjusted stockholders’ equity increased significantly from $152,071 million in 2020 to $385,415 million in 2025. This growth is more pronounced than the corresponding increase in adjusted total assets, suggesting improved equity strength when accounting for adjustments.

Adjusted financial leverage

The adjusted financial leverage ratio experienced a steady decline from 1.94 in 2020 to 1.53 in 2025. This pattern aligns with the trend in reported financial leverage, demonstrating a consistent reduction in leverage and indicating enhanced financial resilience under adjusted measurements.

In summary, the data reflects robust expansion in asset and equity bases alongside a continual decrease in financial leverage ratios. These shifts denote enhanced financial stability and a solidifying equity foundation, potentially positioning the company for sustained financial health and reduced risk exposure over the analyzed periods.

The financial data exhibits a positive growth trajectory in key performance indicators over the periods analyzed. Both net income and revenue demonstrate consistent increases from June 30, 2020, through June 30, 2025, reflecting improved financial performance and expansion.

Net Income

Net income rises steadily from 44,281 million US dollars in 2020 to 101,832 million US dollars in 2025, more than doubling in this timeframe. This steady increase suggests enhanced profitability and operational efficiency.

Revenue

Revenue shows a continuous upward trend starting at 143,015 million US dollars in 2020 and reaching 281,724 million US dollars in 2025. The substantial growth in revenue supports the observed rise in net income and indicates expansion in business activities or market share.

Reported Net Profit Margin

The reported net profit margin fluctuates modestly but remains strong overall, beginning at 30.96% in 2020 and ending at 36.15% in 2025. Notable peaks occur in 2021 and 2022, reaching above 36%, followed by a slight dip in 2023 before recovering. This stability reflects effective cost management relative to revenue.

Adjusted Net Income and Revenue

Adjusted figures for net income and revenue follow similar upward patterns. Adjusted net income increases from 50,166 million to 104,214 million US dollars, while adjusted revenue grows from 144,989 million to 288,805 million US dollars, confirming the robustness of earnings quality and top-line performance after considering non-recurring or exceptional items.

Adjusted Net Profit Margin

Adjusted net profit margin shows some variability with a high of 37.37% in 2021 and a lower point near 31.94% in 2022, followed by a recovery to slightly above 36% by 2025. The margin’s fluctuation suggests periods of varying expense impacts or changes in business conditions but ultimately a strong profitability level.

In summary, the data reflect sustained growth in revenue and profitability with consistently solid profit margins, both reported and adjusted. The company demonstrates effective operational and financial management, maintaining profitability amid expanding revenues over the analyzed period.

The analysis of the financial data over the six-year period reveals several key trends in profitability, equity growth, and returns.

Net Income

Net income demonstrates a consistent upward trajectory, increasing from $44,281 million in 2020 to $101,832 million in 2025. The growth is steady, with a significant jump between 2023 and 2024, indicating strong profitability improvements in the latter years.

Stockholders' Equity

Stockholders’ equity shows a substantial increase over the period, rising from $118,304 million in 2020 to $343,479 million in 2025. The increase is especially pronounced after 2022, reflecting either retained earnings growth, additional equity issuance, or asset appreciation contributing to a strong capital base expansion.

Reported Return on Equity (ROE)

Reported ROE starts at a high level of 37.43% in 2020 and peaks at 43.68% in 2022. However, from 2023 onwards, there is a notable decline to 29.65% in 2025. This decline in ROE, despite growing net income and equity, suggests that equity growth outpaces income gains, potentially signaling diminishing efficiency in generating profits from equity capital or changes in capital structure.

Adjusted Net Income

Adjusted net income follows a similar upward trend as net income, starting at $50,166 million in 2020 and reaching $104,214 million by 2025. The adjustment narrows the growth gap experienced around 2022 and 2023, reflecting possible non-recurring items or accounting adjustments impacting the reported figures.

Adjusted Stockholders' Equity

Adjusted stockholders’ equity also rises substantially from $152,071 million in 2020 to $385,415 million in 2025. The adjusted figures consistently exceed reported equity, indicating the presence of adjustments such as goodwill, intangible asset valuations, or other balance sheet recalibrations.

Adjusted ROE

Adjusted ROE starts at 32.99% in 2020, increases to 35.95% in 2021, then declines steadily to 27.04% by 2025. While this trend parallels the reported ROE, the adjusted ROE values are uniformly lower, which may reflect the impact of adjustments on profitability measures or a more conservative evaluation of earnings relative to equity.

Overall, the financial performance exhibits strong growth in absolute profit and equity levels, but the declining trends in both reported and adjusted ROE indicate a relative decrease in capital efficiency over the latter part of the period. These patterns suggest management should monitor capital allocation and profitability margins closely to sustain long-term financial health.

The financial data reveals several notable trends over the periods analyzed. Net income shows a consistent upward trajectory, increasing from $44,281 million in mid-2020 to $101,832 million projected for mid-2025. This indicates sustained profitability growth. Similarly, total assets have expanded significantly, rising from $301,311 million to an anticipated $619,003 million over the same period, reflecting considerable asset accumulation and potential investment in growth.

The reported Return on Assets (ROA) exhibits some fluctuation. Initially, ROA increased from 14.7% in 2020 to a peak of 19.94% in 2022, suggesting improved efficiency in generating income from assets. However, the trend then slightly reverses, declining to an estimated 16.45% by 2025. This may indicate that while assets continue to grow, income generation relative to the asset base is moderately diminishing over the later years.

When focusing on adjusted figures, adjusted net income also grows steadily, though the increments appear less volatile, moving from $50,166 million in 2020 to $104,214 million in 2025. Adjusted total assets show a similar increasing pattern but are slightly lower than reported total assets, reaching $590,839 million by 2025.

The adjusted ROA starts higher than the reported ROA at 16.97% in 2020, peaking at 19.76% in 2021. From that point, it experiences minor fluctuations but remains relatively stable, ending around 17.64% in 2025. This suggests that after adjustments, the efficiency in utilizing assets to generate income is somewhat steadier compared to the reported figures.

Profitability Trends

Consistent growth in both net and adjusted net income indicate strengthening earnings capacity over the analyzed period.

Asset Growth

Substantial asset growth is observed, with total and adjusted total assets more than doubling from 2020 to 2025, highlighting significant capital accumulation or investment.

Return on Assets (ROA)

Reported ROA peaked in 2022 before declining slightly, while adjusted ROA showed more stability but with a slight downward tendency towards 2025, pointing to a mild reduction in asset utilization efficiency in recent years.

Overall Insights

The data demonstrates robust financial growth, but a need to monitor the efficiency of asset usage, as rising asset bases may lead to diminishing incremental returns if not managed effectively.