Microsoft Corp. (NASDAQ:MSFT)

Current Ratio

The current ratio shows a declining trend over the six-year period. It decreased from 2.53 in 2019 to 1.27 in 2024. This decline indicates a reduction in the company's short-term liquidity, suggesting that the ability to cover current liabilities with current assets has weakened substantially over time.

Quick Ratio

Similar to the current ratio, the quick ratio also declined steadily from 2.35 in 2019 to 1.06 in 2024. This reduction implies that the company's liquidity position, excluding inventory, has deteriorated, reflecting a decreasing capacity to meet short-term obligations without relying on inventory liquidation.

Cash Ratio

The cash ratio experienced the most pronounced decline, falling from 1.93 in 2019 to 0.6 in 2024. This significant drop highlights a notable decrease in the company's most liquid assets relative to current liabilities, which may raise concerns about immediate liquidity and the ability to cover short-term liabilities purely with cash or cash equivalents.

Current Assets

Current assets showed moderate growth from 175,552 million US$ in 2019 to a peak of 184,406 million US$ in 2021. However, there was a decline thereafter, falling to 159,734 million US$ by 2024, indicating a decrease in liquid or short-term resources available to the company over the most recent years.

Current Liabilities

Current liabilities exhibited a steady upward trend throughout the period. The figure increased from 69,420 million US$ in 2019 to 125,286 million US$ in 2024, reflecting a growing obligation in the short term. The increases were consistent annually, with notable acceleration after 2021.

Current Ratio

The current ratio demonstrates a notable decline over the years, starting at a strong 2.53 in 2019, slightly decreasing to 2.52 in 2020, but then dropping more sharply to 1.27 by 2024. This trend signals a reduction in liquidity and the company's ability to cover short-term liabilities with current assets has diminished considerably. The ratio dipping closer to 1 indicates increased financial risk in terms of short-term obligations.

Total Quick Assets

The total quick assets showed fluctuations over the analyzed period. Starting at 163,343 million US dollars in June 2019, it experienced a slight increase, peaking near 168,538 million in June 2020 and remaining relatively stable through June 2021. However, a downward trend emerged thereafter, with values decreasing to 149,018 million in June 2022 and further fluctuating to 159,950 million in June 2023 before dropping significantly to 132,467 million by June 2024. This indicates a diminishing level of liquid assets available in recent years.

Current Liabilities

Current liabilities increased steadily throughout the period. From 69,420 million US dollars in June 2019, liabilities rose gradually each year, reaching 125,286 million by June 2024. This consistent growth in short-term obligations suggests an increasing burden on the company's liquidity position over time.

Quick Ratio

The quick ratio demonstrated a declining trend, moving from a robust 2.35 in June 2019 to 1.06 by June 2024. The ratio remained relatively stable around 2.3 during the first two years but dropped significantly between June 2020 and June 2021 to 1.9 and continued a gradual decline thereafter. The sharp fall in the final period reflects a tightening liquidity position, indicating that the company may face greater challenges meeting short-term obligations with its most liquid assets.

Total Cash Assets

The data indicates a decline in total cash assets over the analyzed periods. Starting at 133,819 million US dollars in mid-2019, the amount fluctuated slightly but generally trended downward to 75,543 million US dollars by mid-2024. Notably, a sharper reduction occurred after mid-2021, with a marked decrease from 130,334 million to 75,543 million over three years.

Current Liabilities

Current liabilities show a consistent upward trend throughout the same timeframe. Beginning at 69,420 million US dollars in mid-2019, the liabilities increased steadily each year, reaching 125,286 million US dollars by mid-2024. This suggests a growing short-term financial obligation.

Cash Ratio

The cash ratio, which measures the company’s ability to cover short-term liabilities with cash and cash equivalents, declined consistently from 1.93 in mid-2019 to 0.6 by mid-2024. While the ratio remained above 1 until mid-2022, indicating sufficient cash to cover current liabilities, it dropped below 1 thereafter, reflecting potential liquidity concerns.

Overall, the company’s liquidity position appears to be weakening over the five-year period. The reduction in cash assets combined with increasing current liabilities and a declining cash ratio suggests heightened risk in meeting short-term obligations purely through cash reserves. This trend warrants consideration in liquidity management and operational planning.