Analysis of Geographic Areas
Microsoft Corp. operates in 2 regions: United States and Other countries.
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Area Asset Turnover
Microsoft Corp., asset turnover by geographic area
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| United States | ||||||
| Other countries |
Based on: 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), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
- United States Asset Turnover
-
The asset turnover ratio in the United States exhibits a gradual decline over the analyzed period. Starting at 1.16 in June 2019, a slight increase to 1.20 is observed in June 2020. However, from 2021 onwards, the ratio consistently decreases, dropping to 1.10 in 2021 and further declining to 0.94 in 2022. This downward trend continues through 2023 and 2024, reaching a low of 0.67 by the end of the period. This indicates a diminishing efficiency in utilizing assets to generate revenue within the United States over the six-year span.
- Other Countries Asset Turnover
-
The asset turnover ratio for other countries remains relatively stable in the early years, with minor fluctuations around 1.61 to 1.64 between June 2019 and June 2022. A noticeable decline begins in 2023, where the ratio decreases to 1.44, followed by a more marked drop to 1.04 in June 2024. Despite this decline, the ratio values for other countries remain higher than those observed in the United States until the latter part of the period, suggesting a relatively better asset utilization internationally, albeit with emerging downward pressure recently.
- Comparative Insights
-
Comparing the two geographic segments, the asset turnover ratio in other countries consistently surpasses that of the United States throughout the period, except for the initial years where the figures are closer. Both regions experience declines towards the end of the period, with the United States showing a more pronounced and earlier onset of reduction in asset turnover. The steeper decline in the US ratio may reflect changes in market conditions, asset base expansion without proportional revenue growth, or other operational factors affecting efficiency. The decline in other countries' asset turnover ratios, though less severe, indicates potential challenges in maintaining prior levels of asset utilization internationally.
Area Asset Turnover: United States
Microsoft Corp.; United States; area asset turnover calculation
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Long-lived assets | ||||||
| Area Activity Ratio | ||||||
| Area asset turnover1 | ||||||
Based on: 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), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Area asset turnover = Revenue ÷ Long-lived assets
= ÷ =
- Revenue Trends
- Revenue for the United States geographic area shows a consistent upward trajectory over the six-year period. Starting at $64,199 million in 2019, revenue increased annually, reaching $124,704 million by 2024. This reflects more than a 94% increase from the initial period, indicating strong and sustained growth in this market.
- Long-lived Assets Trends
- Long-lived assets demonstrate a significant increase, doubling from $55,252 million in 2019 to $186,106 million in 2024. This sharp rise especially between 2022 and 2024 suggests substantial investment in capital or infrastructure, signaling expansion or modernization efforts in physical or intangible long-term assets within the region.
- Area Asset Turnover Ratio
- The area asset turnover ratio, which measures revenue generated per unit of long-lived assets, reveals a declining trend. The ratio started at 1.16 in 2019, peaked slightly at 1.20 in 2020, then steadily decreased to 0.67 by 2024. This decline indicates diminishing efficiency in using assets to generate revenue, likely impacted by the rapid increase in asset base outpacing revenue growth.
- Overall Insights
- The data illustrates robust revenue growth concurrent with substantial asset accumulation. However, the decreasing asset turnover ratio signals potential overinvestment or decreasing operational efficiency in asset utilization. While revenue growth is strong, the company may need to evaluate asset deployment strategies to enhance productivity and maintain balanced growth.
Area Asset Turnover: Other countries
Microsoft Corp.; Other countries; area asset turnover calculation
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Long-lived assets | ||||||
| Area Activity Ratio | ||||||
| Area asset turnover1 | ||||||
Based on: 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), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Area asset turnover = Revenue ÷ Long-lived assets
= ÷ =
- Revenue Trends
- Revenue in the "Other countries" geographic area demonstrated a consistent upward trend over the six-year period. Starting at approximately $61.6 billion in June 2019, revenue increased steadily each year, reaching about $120.4 billion by June 2024. This represents nearly a doubling of revenue, indicating robust expansion in this region.
- Long-lived Assets Trends
- Long-lived assets also showed significant growth throughout the timeframe. Beginning at around $38.4 billion in 2019, these assets rose consistently each year to approximately $115.3 billion in 2024. The increase was particularly pronounced between 2023 and 2024, with an approximate 58% jump, suggesting substantial investment or capital expenditure in the latter period.
- Area Asset Turnover Trends
- The area asset turnover ratio, which measures revenue generated per dollar of long-lived assets, remained relatively stable between 1.61 and 1.64 from 2019 through 2022. However, starting in 2023, this ratio began to decline, falling to 1.44 and then to 1.04 by 2024. This decline indicates that while assets have grown substantially, revenue has not increased proportionally, suggesting a decrease in asset efficiency in generating revenue.
- Overall Insights
- The data reflects strong revenue growth accompanied by significant asset accumulation, especially in the final year analyzed. Despite the rising revenue levels, the efficiency of utilizing these assets to generate revenue has diminished in recent years. This could imply either strategic expansion requiring upfront capital investment, or potential challenges in efficiently deploying the increased asset base to maintain prior levels of revenue productivity.
Revenue
Microsoft Corp., revenue by geographic area
US$ in millions
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| United States | ||||||
| Other countries | ||||||
| Total |
Based on: 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), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
The analysis of the annual geographic area revenue data reveals consistent growth in both the United States and other countries over the six-year period from June 30, 2019, to June 30, 2024.
- United States Revenue Trends
- The revenue generated in the United States has shown a steady upward trajectory each year. Starting at $64,199 million in 2019, the figure increased to $124,704 million in 2024, nearly doubling over the period. Notable increments occurred especially between the years ending June 30, 2021 to June 30, 2024, indicating accelerated growth in this region.
- Other Countries Revenue Trends
- Revenues from other countries similarly demonstrate a robust growth pattern. Beginning at $61,644 million in 2019, the revenue rose to $120,418 million by 2024. The growth rate in other countries parallels that of the United States, with consistent year-on-year increases and a marked acceleration in revenue during the latter years of the analyzed period.
- Total Revenue Analysis
- The total revenue reflects the cumulative effect of the growth in both geographic segments. From $125,843 million in 2019, total revenue expanded to $245,122 million in 2024. The overall trend indicates sustained expansion, with average annual increases compounding steadily. The growth in total revenue aligns closely with the individual growth trends of the United States and other countries, emphasizing balanced geographic diversification.
- Summary of Insights
- Both geographic areas have contributed significantly to revenue growth, with the United States and other countries showing similar growth rates. This balance suggests that the company’s global strategy is effectively capitalizing on opportunities across markets. The accelerating revenue growth in recent years may reflect enhanced market penetration, product expansion, or favorable economic conditions impacting the demand in both regions. The absence of negative or stagnant revenue figures supports a positive outlook on the company’s geographic revenue performance.
Long-lived assets
Microsoft Corp., long-lived assets by geographic area
US$ in millions
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|
| United States | ||||||
| Other countries | ||||||
| Total |
Based on: 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), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
- United States long-lived assets
- The value of long-lived assets in the United States demonstrates a strong upward trend over the period analyzed. Beginning at $55,252 million in mid-2019, there was consistent growth each year, reaching $60,789 million in 2020 and $76,153 million in 2021. This growth accelerated significantly in the subsequent years, rising to $106,430 million in 2022 and $114,380 million in 2023. The most notable increase occurred in 2024, with assets surging to $186,106 million. The progression shows an overall considerable expansion, particularly after 2021, indicating increased investment or asset accumulation domestically.
- Other countries long-lived assets
- Long-lived assets located in other countries also exhibit a steady growth pattern throughout the years. The values increased from $38,380 million in mid-2019 to $42,504 million in 2020 and $52,161 million in 2021. The trend continues upward with assets amounting to $59,938 million in 2022 and $72,859 million in 2023. By 2024, assets in other countries reached $115,263 million. Although growth is consistent, the sharpest increase occurred between 2023 and 2024, similar to the domestic asset pattern, highlighting expanding international asset holdings.
- Total long-lived assets
- The total long-lived assets, representing the sum of domestic and international assets, rose steadily over the period. From $93,632 million in 2019, the total increased to $103,293 million in 2020 and $128,314 million in 2021. The upward trajectory continued with a value of $166,368 million in 2022, followed by $187,239 million in 2023. The largest surge was observed in 2024, with total assets escalating sharply to $301,369 million. This substantial increase, nearly doubling the previous year’s figure, demonstrates significant asset growth and possibly strategic expansions or large capital expenditures during this period.
- Overall observations
- Both geographic segments show sustained growth in long-lived assets, with more pronounced increases occurring from 2022 onwards. The most substantial asset accumulation was observed in 2024, with domestic assets contributing a larger absolute increase compared to international assets, though both segments grew significantly. The accelerated growth in assets in the last two years may reflect strategic investment initiatives, acquisitions, or expansions. The consistent upward trend across all periods indicates sustained capital investment across regions, with a notable emphasis on domestic asset growth in recent years.