Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Microsoft Corp., solvency ratios
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).
- Debt to Equity Trends
- There is a consistent decline in the debt to equity ratio from 0.77 in June 2019 to 0.29 in June 2024. When including operating lease liabilities, the ratio follows a similar declining pattern, falling from 0.84 to 0.36 over the same period. This indicates a notable reduction in reliance on debt financing relative to equity.
- Debt to Capital Ratios
- The debt to capital ratio shows a steady decrease from 0.43 in 2019 to 0.23 in 2024, reflecting a lower proportion of debt in the company’s capital structure. Including operating lease liabilities, this ratio decreases from 0.46 to 0.27, signifying improved capitalization with less leverage over time.
- Debt to Assets Analysis
- Debt to assets decreased gradually from 0.27 in 2019 to 0.15 in 2024, indicating a reduction in total leverage relative to assets. With operating lease liabilities included, the ratio declined from 0.30 to 0.19 during the same timeframe, confirming greater asset coverage with less debt burden.
- Financial Leverage
- Financial leverage shows a declining trend from 2.8 in 2019 to 1.91 in 2024. This suggests the company is becoming less reliant on debt to finance its assets, implying a strengthening in the equity base or reduction in total liabilities.
- Interest Coverage Ratio
- The interest coverage ratio improved significantly between 2019 and 2023, increasing from 17.27 to a peak of 46.38, indicative of greater earnings relative to interest expenses. However, in 2024 there was a decrease to 37.72, still maintaining a strong capacity to meet interest obligations despite the slight decline.
- Fixed Charge Coverage Ratio
- Fixed charge coverage ratios rose from 10.94 in 2019 to 19.44 in 2023, reflecting an enhanced ability to cover fixed financial obligations. A slight decline to 17.61 in 2024 suggests some reduction in coverage capacity but remains at a high level compared to earlier years.
- Overall Financial Position
- The financial data reflects an overall trend of strengthening financial health, characterized by consistent deleveraging and improved coverage ratios. The gradual decrease in various debt ratios alongside high and stable coverage ratios points to effective management of leverage and interest cost risks over the reviewed periods.
Debt Ratios
Coverage Ratios
Debt to Equity
Microsoft Corp., debt to equity calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | 6,693) | —) | —) | —) | —) | —) | |
| Current portion of long-term debt | 2,249) | 5,247) | 2,749) | 8,072) | 3,749) | 5,516) | |
| Current finance lease liabilities | 2,349) | 1,197) | 1,060) | 791) | 540) | 317) | |
| Long-term debt, excluding current portion | 42,688) | 41,990) | 47,032) | 50,074) | 59,578) | 66,662) | |
| Long-term finance lease liabilities | 24,796) | 15,870) | 13,842) | 11,750) | 8,956) | 6,257) | |
| Total debt | 78,775) | 64,304) | 64,683) | 70,687) | 72,823) | 78,752) | |
| Stockholders’ equity | 268,477) | 206,223) | 166,542) | 141,988) | 118,304) | 102,330) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.29 | 0.31 | 0.39 | 0.50 | 0.62 | 0.77 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Accenture PLC | 0.04 | 0.01 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | 0.40 | 0.22 | 0.29 | 0.28 | 0.31 | 0.39 | |
| Cadence Design Systems Inc. | 0.53 | 0.19 | 0.27 | 0.13 | 0.14 | — | |
| CrowdStrike Holdings Inc. | 0.32 | 0.51 | 0.72 | 0.85 | 0.00 | — | |
| Fair Isaac Corp. | — | — | — | — | 2.54 | 2.87 | |
| International Business Machines Corp. | 2.01 | 2.51 | 2.32 | 2.74 | 2.99 | — | |
| Intuit Inc. | 0.33 | 0.35 | 0.42 | 0.21 | 0.66 | 0.12 | |
| Oracle Corp. | 9.98 | 84.33 | — | 16.08 | 5.93 | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.00 | 0.00 | 0.13 | — | |
| Palo Alto Networks Inc. | 0.19 | 1.14 | 17.51 | 5.08 | 2.80 | 0.90 | |
| Salesforce Inc. | 0.17 | 0.20 | 0.19 | 0.07 | 0.09 | — | |
| ServiceNow Inc. | 0.15 | 0.20 | 0.30 | 0.43 | 0.58 | — | |
| Synopsys Inc. | 0.00 | 0.00 | 0.00 | 0.02 | 0.03 | 0.03 | |
| Workday Inc. | 0.37 | 0.53 | 0.41 | 0.55 | 0.51 | — | |
| Debt to Equity, Sector | |||||||
| Software & Services | 0.54 | 0.64 | 0.71 | 0.83 | 0.95 | — | |
| Debt to Equity, Industry | |||||||
| Information Technology | 0.61 | 0.66 | 0.71 | 0.83 | 0.97 | — | |
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
Debt to equity = Total debt ÷ Stockholders’ equity
= 78,775 ÷ 268,477 = 0.29
2 Click competitor name to see calculations.
- Total Debt
- The total debt experienced a general decline from June 30, 2019, to June 30, 2023, decreasing from 78,752 million USD to 64,304 million USD. However, in the last reported period ending June 30, 2024, total debt increased significantly to 78,775 million USD, surpassing the initial value recorded in 2019.
- Stockholders' Equity
- Stockholders' equity showed a consistent and substantial increase across all periods. Starting from 102,330 million USD in June 30, 2019, equity grew steadily each year, reaching 268,477 million USD by June 30, 2024. This indicates a strong upward trend in the company's net asset value.
- Debt to Equity Ratio
- The debt to equity ratio exhibited a continuous decline over the analyzed periods. Beginning at 0.77 in June 2019, the ratio decreased steadily to 0.29 by June 30, 2024. This reflects an improving capital structure with relatively lower leverage and greater reliance on equity financing.
Debt to Equity (including Operating Lease Liability)
Microsoft Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | 6,693) | —) | —) | —) | —) | —) | |
| Current portion of long-term debt | 2,249) | 5,247) | 2,749) | 8,072) | 3,749) | 5,516) | |
| Current finance lease liabilities | 2,349) | 1,197) | 1,060) | 791) | 540) | 317) | |
| Long-term debt, excluding current portion | 42,688) | 41,990) | 47,032) | 50,074) | 59,578) | 66,662) | |
| Long-term finance lease liabilities | 24,796) | 15,870) | 13,842) | 11,750) | 8,956) | 6,257) | |
| Total debt | 78,775) | 64,304) | 64,683) | 70,687) | 72,823) | 78,752) | |
| Operating lease liabilities (included in Other current liabilities) | 3,580) | 2,409) | 2,228) | 1,962) | 1,616) | 1,515) | |
| Long-term operating lease liabilities | 15,497) | 12,728) | 11,489) | 9,629) | 7,671) | 6,188) | |
| Total debt (including operating lease liability) | 97,852) | 79,441) | 78,400) | 82,278) | 82,110) | 86,455) | |
| Stockholders’ equity | 268,477) | 206,223) | 166,542) | 141,988) | 118,304) | 102,330) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 0.36 | 0.39 | 0.47 | 0.58 | 0.69 | 0.84 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Accenture PLC | 0.15 | 0.12 | 0.15 | 0.18 | 0.21 | 0.00 | |
| Adobe Inc. | 0.43 | 0.25 | 0.33 | 0.32 | 0.35 | 0.39 | |
| Cadence Design Systems Inc. | 0.56 | 0.24 | 0.34 | 0.18 | 0.20 | — | |
| CrowdStrike Holdings Inc. | 0.34 | 0.54 | 0.76 | 0.89 | 0.00 | — | |
| Fair Isaac Corp. | — | — | — | — | 2.83 | 2.87 | |
| International Business Machines Corp. | 2.14 | 2.66 | 2.46 | 2.92 | 3.23 | — | |
| Intuit Inc. | 0.36 | 0.39 | 0.46 | 0.25 | 0.71 | 0.12 | |
| Oracle Corp. | 10.85 | 88.84 | — | 16.61 | 6.10 | — | |
| Palantir Technologies Inc. | 0.05 | 0.07 | 0.10 | 0.11 | 0.30 | — | |
| Palo Alto Networks Inc. | 0.27 | 1.33 | 19.12 | 5.68 | 3.16 | 0.90 | |
| Salesforce Inc. | 0.23 | 0.25 | 0.25 | 0.15 | 0.18 | — | |
| ServiceNow Inc. | 0.24 | 0.30 | 0.44 | 0.60 | 0.75 | — | |
| Synopsys Inc. | 0.08 | 0.11 | 0.12 | 0.13 | 0.14 | 0.03 | |
| Workday Inc. | 0.41 | 0.58 | 0.46 | 0.68 | 0.63 | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Software & Services | 0.63 | 0.73 | 0.81 | 0.94 | 1.06 | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.67 | 0.73 | 0.77 | 0.91 | 1.04 | — | |
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
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 97,852 ÷ 268,477 = 0.36
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt exhibited a gradual decline from June 2019 to June 2022, decreasing from $86,455 million to $78,400 million. However, there was a slight increase to $79,441 million in June 2023, followed by a more substantial rise to $97,852 million by June 2024. This indicates a recent shift towards higher leverage after a period of reduction.
- Stockholders’ Equity
- Stockholders’ equity consistently increased over the entire timeframe, starting at $102,330 million in June 2019 and rising steadily each year to reach $268,477 million by June 2024. This reflects a strong growth in the company’s net assets and retained earnings, signaling enhanced financial strength and value creation for shareholders.
- Debt to Equity Ratio (including operating lease liability)
- The debt-to-equity ratio showed a consistent downward trend, decreasing from 0.84 in June 2019 to 0.36 in June 2024. This decline indicates a significant improvement in the company’s capital structure, with equity growing faster relative to debt, thereby reducing financial risk and enhancing solvency.
Debt to Capital
Microsoft Corp., debt to capital calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | 6,693) | —) | —) | —) | —) | —) | |
| Current portion of long-term debt | 2,249) | 5,247) | 2,749) | 8,072) | 3,749) | 5,516) | |
| Current finance lease liabilities | 2,349) | 1,197) | 1,060) | 791) | 540) | 317) | |
| Long-term debt, excluding current portion | 42,688) | 41,990) | 47,032) | 50,074) | 59,578) | 66,662) | |
| Long-term finance lease liabilities | 24,796) | 15,870) | 13,842) | 11,750) | 8,956) | 6,257) | |
| Total debt | 78,775) | 64,304) | 64,683) | 70,687) | 72,823) | 78,752) | |
| Stockholders’ equity | 268,477) | 206,223) | 166,542) | 141,988) | 118,304) | 102,330) | |
| Total capital | 347,252) | 270,527) | 231,225) | 212,675) | 191,127) | 181,082) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.23 | 0.24 | 0.28 | 0.33 | 0.38 | 0.43 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Accenture PLC | 0.03 | 0.01 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | 0.29 | 0.18 | 0.23 | 0.22 | 0.24 | 0.28 | |
| Cadence Design Systems Inc. | 0.35 | 0.16 | 0.21 | 0.11 | 0.12 | — | |
| CrowdStrike Holdings Inc. | 0.24 | 0.34 | 0.42 | 0.46 | 0.00 | — | |
| Fair Isaac Corp. | 1.77 | 1.59 | 1.76 | 1.10 | 0.72 | 0.74 | |
| International Business Machines Corp. | 0.67 | 0.72 | 0.70 | 0.73 | 0.75 | — | |
| Intuit Inc. | 0.25 | 0.26 | 0.30 | 0.17 | 0.40 | 0.10 | |
| Oracle Corp. | 0.91 | 0.99 | 1.09 | 0.94 | 0.86 | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.00 | 0.00 | 0.12 | — | |
| Palo Alto Networks Inc. | 0.16 | 0.53 | 0.95 | 0.84 | 0.74 | 0.47 | |
| Salesforce Inc. | 0.15 | 0.16 | 0.16 | 0.06 | 0.08 | — | |
| ServiceNow Inc. | 0.13 | 0.16 | 0.23 | 0.30 | 0.37 | — | |
| Synopsys Inc. | 0.00 | 0.00 | 0.00 | 0.02 | 0.03 | 0.03 | |
| Workday Inc. | 0.27 | 0.35 | 0.29 | 0.35 | 0.34 | — | |
| Debt to Capital, Sector | |||||||
| Software & Services | 0.35 | 0.39 | 0.42 | 0.45 | 0.49 | — | |
| Debt to Capital, Industry | |||||||
| Information Technology | 0.38 | 0.40 | 0.41 | 0.45 | 0.49 | — | |
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
Debt to capital = Total debt ÷ Total capital
= 78,775 ÷ 347,252 = 0.23
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a declining trend from June 2019 through June 2023, decreasing from 78,752 million USD to 64,304 million USD. However, in the most recent period ending June 2024, there was a marked increase in total debt, rising to 78,775 million USD. This reversal after several years of reduction indicates a potential change in the company's capital structure or financing strategy.
- Total Capital
- Total capital consistently increased over the entire period, starting at 181,082 million USD in June 2019 and growing steadily to 347,252 million USD by June 2024. This robust growth indicates an overall expansion in the company's financing base or asset base.
- Debt to Capital Ratio
- The debt to capital ratio decreased consistently from 0.43 in June 2019 to 0.23 in June 2024. This downward trend reflects a decreasing reliance on debt relative to the company's total capital. Despite the rise in total debt in the latest period, the ratio continued to fall due to the proportionally larger increase in total capital. The steady reduction in this ratio over the years suggests improved financial leverage and potentially lower financial risk.
Debt to Capital (including Operating Lease Liability)
Microsoft Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | 6,693) | —) | —) | —) | —) | —) | |
| Current portion of long-term debt | 2,249) | 5,247) | 2,749) | 8,072) | 3,749) | 5,516) | |
| Current finance lease liabilities | 2,349) | 1,197) | 1,060) | 791) | 540) | 317) | |
| Long-term debt, excluding current portion | 42,688) | 41,990) | 47,032) | 50,074) | 59,578) | 66,662) | |
| Long-term finance lease liabilities | 24,796) | 15,870) | 13,842) | 11,750) | 8,956) | 6,257) | |
| Total debt | 78,775) | 64,304) | 64,683) | 70,687) | 72,823) | 78,752) | |
| Operating lease liabilities (included in Other current liabilities) | 3,580) | 2,409) | 2,228) | 1,962) | 1,616) | 1,515) | |
| Long-term operating lease liabilities | 15,497) | 12,728) | 11,489) | 9,629) | 7,671) | 6,188) | |
| Total debt (including operating lease liability) | 97,852) | 79,441) | 78,400) | 82,278) | 82,110) | 86,455) | |
| Stockholders’ equity | 268,477) | 206,223) | 166,542) | 141,988) | 118,304) | 102,330) | |
| Total capital (including operating lease liability) | 366,329) | 285,664) | 244,942) | 224,266) | 200,414) | 188,785) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.27 | 0.28 | 0.32 | 0.37 | 0.41 | 0.46 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Accenture PLC | 0.13 | 0.11 | 0.13 | 0.15 | 0.17 | 0.00 | |
| Adobe Inc. | 0.30 | 0.20 | 0.25 | 0.24 | 0.26 | 0.28 | |
| Cadence Design Systems Inc. | 0.36 | 0.19 | 0.25 | 0.15 | 0.17 | — | |
| CrowdStrike Holdings Inc. | 0.26 | 0.35 | 0.43 | 0.47 | 0.00 | — | |
| Fair Isaac Corp. | 1.75 | 1.57 | 1.72 | 1.09 | 0.74 | 0.74 | |
| International Business Machines Corp. | 0.68 | 0.73 | 0.71 | 0.74 | 0.76 | — | |
| Intuit Inc. | 0.26 | 0.28 | 0.31 | 0.20 | 0.42 | 0.10 | |
| Oracle Corp. | 0.92 | 0.99 | 1.08 | 0.94 | 0.86 | — | |
| Palantir Technologies Inc. | 0.05 | 0.06 | 0.09 | 0.10 | 0.23 | — | |
| Palo Alto Networks Inc. | 0.21 | 0.57 | 0.95 | 0.85 | 0.76 | 0.47 | |
| Salesforce Inc. | 0.19 | 0.20 | 0.20 | 0.13 | 0.16 | — | |
| ServiceNow Inc. | 0.19 | 0.23 | 0.31 | 0.37 | 0.43 | — | |
| Synopsys Inc. | 0.07 | 0.10 | 0.11 | 0.11 | 0.12 | 0.03 | |
| Workday Inc. | 0.29 | 0.37 | 0.32 | 0.41 | 0.39 | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Software & Services | 0.39 | 0.42 | 0.45 | 0.48 | 0.51 | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.40 | 0.42 | 0.44 | 0.48 | 0.51 | — | |
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
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 97,852 ÷ 366,329 = 0.27
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt exhibits a fluctuating trend over the periods. Initially, it decreased from 86,455 million USD in mid-2019 to 82,110 million USD in mid-2020, remaining relatively stable at 82,278 million USD in mid-2021. Subsequently, it further declined to 78,400 million USD in mid-2022, followed by a slight increase to 79,441 million USD in mid-2023. Notably, by mid-2024, total debt increased significantly to 97,852 million USD, marking the highest level in the dataset.
- Total Capital (including operating lease liability)
- Total capital demonstrated a consistent and pronounced upward trajectory throughout the period under review. Starting at 188,785 million USD in mid-2019, it increased each year, reaching 200,414 million USD in mid-2020 and continuing to expand to 224,266 million USD in mid-2021. This growth accelerated with total capital rising to 244,942 million USD in mid-2022, 285,664 million USD in mid-2023, and then pushing substantially higher to 366,329 million USD by mid-2024.
- Debt to Capital Ratio (including operating lease liability)
- The debt to capital ratio reveals a consistent downward trend across the observed periods. It decreased from 0.46 in mid-2019 to 0.41 in mid-2020 and further reduced to 0.37 in mid-2021. This ratio continued to decline more notably to 0.32 in mid-2022 and 0.28 in mid-2023, eventually reaching the lowest point of 0.27 in mid-2024. This indicates a gradual reduction in the proportion of debt relative to total capital, signifying a strengthening capital structure despite the recent increase in absolute debt levels.
- Summary of Financial Trends
- Over the six-year span, total capital has grown substantially, outpacing increases in total debt and thereby improving the overall capital structure as evidenced by the falling debt to capital ratio. Although total debt remained relatively stable or decreased in the earlier years, it rose markedly in the latest period. Despite this increase, the proportionate share of debt in the capital mix continued to decline, reflecting significant equity or other sources of capital growth. This trend suggests a strategic emphasis on expanding capital base and maintaining a conservative leverage position through most of the period, with a recent shift showing a growing reliance on debt financing, albeit still within a declining leverage ratio context.
Debt to Assets
Microsoft Corp., debt to assets calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | 6,693) | —) | —) | —) | —) | —) | |
| Current portion of long-term debt | 2,249) | 5,247) | 2,749) | 8,072) | 3,749) | 5,516) | |
| Current finance lease liabilities | 2,349) | 1,197) | 1,060) | 791) | 540) | 317) | |
| Long-term debt, excluding current portion | 42,688) | 41,990) | 47,032) | 50,074) | 59,578) | 66,662) | |
| Long-term finance lease liabilities | 24,796) | 15,870) | 13,842) | 11,750) | 8,956) | 6,257) | |
| Total debt | 78,775) | 64,304) | 64,683) | 70,687) | 72,823) | 78,752) | |
| Total assets | 512,163) | 411,976) | 364,840) | 333,779) | 301,311) | 286,556) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.15 | 0.16 | 0.18 | 0.21 | 0.24 | 0.27 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Accenture PLC | 0.02 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | 0.19 | 0.12 | 0.15 | 0.15 | 0.17 | 0.20 | |
| Cadence Design Systems Inc. | 0.28 | 0.11 | 0.15 | 0.08 | 0.09 | — | |
| CrowdStrike Holdings Inc. | 0.11 | 0.15 | 0.20 | 0.27 | 0.00 | — | |
| Fair Isaac Corp. | 1.29 | 1.18 | 1.29 | 0.80 | 0.52 | 0.58 | |
| International Business Machines Corp. | 0.40 | 0.42 | 0.40 | 0.39 | 0.39 | — | |
| Intuit Inc. | 0.19 | 0.22 | 0.25 | 0.13 | 0.31 | 0.07 | |
| Oracle Corp. | 0.62 | 0.67 | 0.69 | 0.64 | 0.62 | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.00 | 0.00 | 0.07 | — | |
| Palo Alto Networks Inc. | 0.05 | 0.14 | 0.30 | 0.31 | 0.34 | 0.22 | |
| Salesforce Inc. | 0.10 | 0.12 | 0.12 | 0.04 | 0.06 | — | |
| ServiceNow Inc. | 0.07 | 0.09 | 0.11 | 0.15 | 0.19 | — | |
| Synopsys Inc. | 0.00 | 0.00 | 0.00 | 0.01 | 0.02 | 0.02 | |
| Workday Inc. | 0.18 | 0.22 | 0.18 | 0.21 | 0.19 | — | |
| Debt to Assets, Sector | |||||||
| Software & Services | 0.23 | 0.25 | 0.26 | 0.28 | 0.30 | — | |
| Debt to Assets, Industry | |||||||
| Information Technology | 0.25 | 0.26 | 0.26 | 0.29 | 0.31 | — | |
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
Debt to assets = Total debt ÷ Total assets
= 78,775 ÷ 512,163 = 0.15
2 Click competitor name to see calculations.
The analysis of the provided financial data reveals several important trends in the financial structure over the six-year period ending June 30, 2024.
- Total Debt
- The total debt showed a downward trend from 2019 through 2023, decreasing from 78,752 million US dollars in 2019 to 64,304 million US dollars in 2023. This indicates a consistent effort to reduce liabilities. However, in 2024, total debt increased significantly to 78,775 million US dollars, nearly returning to the 2019 level.
- Total Assets
- Total assets experienced steady and substantial growth throughout the entire period. Starting at 286,556 million US dollars in 2019, assets rose each year, reaching 512,163 million US dollars in 2024. This growth reflects expansion and an increasing scale of operations or asset base.
- Debt to Assets Ratio
- The debt to assets ratio continuously declined over the six years, moving from 0.27 in 2019 to 0.15 in 2024. This consistent reduction indicates an improving balance sheet with relatively lower leverage, implying less reliance on debt to finance the asset base despite the rise in absolute debt value in 2024. The ratio’s decline is largely driven by the more rapid increase in total assets compared to total debt.
In summary, the company demonstrated a strong pattern of asset growth combined with a decreasing leverage ratio, suggesting enhanced financial stability and a more robust asset base. The notable rise in total debt in 2024, while increasing leverage in absolute terms, was offset by a far greater increase in assets, continuing the trend towards lower relative indebtedness.
Debt to Assets (including Operating Lease Liability)
Microsoft Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | 6,693) | —) | —) | —) | —) | —) | |
| Current portion of long-term debt | 2,249) | 5,247) | 2,749) | 8,072) | 3,749) | 5,516) | |
| Current finance lease liabilities | 2,349) | 1,197) | 1,060) | 791) | 540) | 317) | |
| Long-term debt, excluding current portion | 42,688) | 41,990) | 47,032) | 50,074) | 59,578) | 66,662) | |
| Long-term finance lease liabilities | 24,796) | 15,870) | 13,842) | 11,750) | 8,956) | 6,257) | |
| Total debt | 78,775) | 64,304) | 64,683) | 70,687) | 72,823) | 78,752) | |
| Operating lease liabilities (included in Other current liabilities) | 3,580) | 2,409) | 2,228) | 1,962) | 1,616) | 1,515) | |
| Long-term operating lease liabilities | 15,497) | 12,728) | 11,489) | 9,629) | 7,671) | 6,188) | |
| Total debt (including operating lease liability) | 97,852) | 79,441) | 78,400) | 82,278) | 82,110) | 86,455) | |
| Total assets | 512,163) | 411,976) | 364,840) | 333,779) | 301,311) | 286,556) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.19 | 0.19 | 0.21 | 0.25 | 0.27 | 0.30 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Accenture PLC | 0.07 | 0.06 | 0.07 | 0.08 | 0.09 | 0.00 | |
| Adobe Inc. | 0.20 | 0.14 | 0.17 | 0.17 | 0.19 | 0.20 | |
| Cadence Design Systems Inc. | 0.29 | 0.14 | 0.18 | 0.11 | 0.13 | — | |
| CrowdStrike Holdings Inc. | 0.12 | 0.16 | 0.21 | 0.29 | 0.00 | — | |
| Fair Isaac Corp. | 1.31 | 1.21 | 1.33 | 0.85 | 0.58 | 0.58 | |
| International Business Machines Corp. | 0.43 | 0.44 | 0.42 | 0.42 | 0.43 | — | |
| Intuit Inc. | 0.20 | 0.24 | 0.27 | 0.16 | 0.33 | 0.07 | |
| Oracle Corp. | 0.67 | 0.71 | 0.73 | 0.66 | 0.64 | — | |
| Palantir Technologies Inc. | 0.04 | 0.05 | 0.07 | 0.08 | 0.17 | — | |
| Palo Alto Networks Inc. | 0.07 | 0.16 | 0.33 | 0.35 | 0.38 | 0.22 | |
| Salesforce Inc. | 0.14 | 0.15 | 0.15 | 0.10 | 0.11 | — | |
| ServiceNow Inc. | 0.11 | 0.13 | 0.17 | 0.21 | 0.24 | — | |
| Synopsys Inc. | 0.05 | 0.07 | 0.07 | 0.08 | 0.08 | 0.02 | |
| Workday Inc. | 0.20 | 0.24 | 0.20 | 0.26 | 0.23 | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Software & Services | 0.27 | 0.29 | 0.30 | 0.32 | 0.34 | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.27 | 0.28 | 0.29 | 0.31 | 0.33 | — | |
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
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 97,852 ÷ 512,163 = 0.19
2 Click competitor name to see calculations.
- Total debt (including operating lease liability)
- The total debt showed a decreasing trend from 86,455 million USD in 2019 to 79,441 million USD in 2023. However, in 2024, there was a significant increase, reaching 97,852 million USD. This indicates that the company's debt level was relatively well-managed and reduced over several years but experienced a marked rise in the most recent year.
- Total assets
- Total assets demonstrated a consistent and strong upward trend throughout the period, increasing from 286,556 million USD in 2019 to 512,163 million USD in 2024. This reflects ongoing asset growth, more than doubling over five years, suggesting expansion and possible reinvestment activities.
- Debt to assets ratio (including operating lease liability)
- The debt-to-assets ratio steadily declined from 0.30 in 2019 to 0.19 by 2023, indicating improving financial leverage and a reduced reliance on debt relative to asset size. Despite the surge in total debt in 2024, the ratio remained stable at 0.19, implying that asset growth continued sufficiently to maintain the leverage ratio.
Financial Leverage
Microsoft Corp., financial leverage calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 512,163) | 411,976) | 364,840) | 333,779) | 301,311) | 286,556) | |
| Stockholders’ equity | 268,477) | 206,223) | 166,542) | 141,988) | 118,304) | 102,330) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 1.91 | 2.00 | 2.19 | 2.35 | 2.55 | 2.80 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Accenture PLC | 1.98 | 1.99 | 2.14 | 2.21 | 2.18 | 2.07 | |
| Adobe Inc. | 2.14 | 1.80 | 1.93 | 1.84 | 1.83 | 1.97 | |
| Cadence Design Systems Inc. | 1.92 | 1.67 | 1.87 | 1.60 | 1.58 | — | |
| CrowdStrike Holdings Inc. | 2.88 | 3.43 | 3.53 | 3.14 | 1.89 | — | |
| Fair Isaac Corp. | — | — | — | — | 4.85 | 4.95 | |
| International Business Machines Corp. | 5.02 | 6.00 | 5.80 | 6.98 | 7.57 | — | |
| Intuit Inc. | 1.74 | 1.61 | 1.69 | 1.57 | 2.14 | 1.68 | |
| Oracle Corp. | 16.20 | 125.24 | — | 25.03 | 9.56 | — | |
| Palantir Technologies Inc. | 1.27 | 1.30 | 1.35 | 1.42 | 1.77 | — | |
| Palo Alto Networks Inc. | 3.87 | 8.29 | 58.35 | 16.14 | 8.23 | 4.16 | |
| Salesforce Inc. | 1.67 | 1.69 | 1.64 | 1.60 | 1.63 | — | |
| ServiceNow Inc. | 2.12 | 2.28 | 2.64 | 2.92 | 3.07 | — | |
| Synopsys Inc. | 1.45 | 1.68 | 1.71 | 1.65 | 1.64 | 1.57 | |
| Workday Inc. | 2.04 | 2.41 | 2.31 | 2.66 | 2.74 | — | |
| Financial Leverage, Sector | |||||||
| Software & Services | 2.36 | 2.55 | 2.73 | 2.96 | 3.14 | — | |
| Financial Leverage, Industry | |||||||
| Information Technology | 2.46 | 2.56 | 2.69 | 2.90 | 3.12 | — | |
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
Financial leverage = Total assets ÷ Stockholders’ equity
= 512,163 ÷ 268,477 = 1.91
2 Click competitor name to see calculations.
- Total assets
- The total assets demonstrated a consistent upward trend over the observed periods, increasing from US$286,556 million as of June 30, 2019, to US$512,163 million by June 30, 2024. This represents a substantial growth, indicating expansion in the company’s asset base and potentially reflecting investments or acquisitions contributing to its growth trajectory.
- Stockholders’ equity
- Stockholders’ equity also showed strong growth, rising from US$102,330 million in 2019 to US$268,477 million in 2024. The increase in equity suggests an accumulation of retained earnings and possibly new equity issuances, highlighting improved financial strength and a solid foundation to support ongoing growth.
- Financial leverage
- The financial leverage ratio exhibited a downward trend, decreasing from 2.8 in 2019 to 1.91 in 2024. This decline indicates a reduction in the reliance on debt financing relative to equity. The company appears to be strengthening its capital structure by increasing equity relative to debt, which generally suggests lower financial risk and improved solvency over time.
Interest Coverage
Microsoft Corp., interest coverage calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 88,136) | 72,361) | 72,738) | 61,271) | 44,281) | 39,240) | |
| Add: Income tax expense | 19,651) | 16,950) | 10,978) | 9,831) | 8,755) | 4,448) | |
| Add: Interest expense | 2,935) | 1,968) | 2,063) | 2,346) | 2,591) | 2,686) | |
| Earnings before interest and tax (EBIT) | 110,722) | 91,279) | 85,779) | 73,448) | 55,627) | 46,374) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 37.72 | 46.38 | 41.58 | 31.31 | 21.47 | 17.27 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Accenture PLC | 165.48 | 193.31 | 195.34 | 131.46 | 205.84 | 273.26 | |
| Adobe Inc. | 42.01 | 61.17 | 54.64 | 51.49 | 37.00 | 21.38 | |
| Cadence Design Systems Inc. | 19.37 | 36.43 | 46.58 | 46.26 | 31.50 | — | |
| CrowdStrike Holdings Inc. | 5.77 | -5.31 | -5.34 | -55.36 | -315.25 | — | |
| Fair Isaac Corp. | 7.08 | 6.79 | 7.83 | 12.80 | 7.09 | 6.44 | |
| International Business Machines Corp. | 4.40 | 6.42 | 1.97 | 5.20 | 4.62 | — | |
| Intuit Inc. | 15.67 | 13.05 | 32.38 | 89.14 | 158.00 | 126.40 | |
| Oracle Corp. | 4.39 | 3.65 | 3.84 | 6.28 | 7.13 | — | |
| Palantir Technologies Inc. | — | 69.33 | -87.97 | -133.20 | -82.39 | — | |
| Palo Alto Networks Inc. | 120.07 | 21.82 | -6.56 | -1.85 | -1.61 | 0.11 | |
| Salesforce Inc. | 18.49 | 3.20 | 7.93 | 21.49 | 6.43 | — | |
| ServiceNow Inc. | 76.57 | 43.00 | 15.78 | 9.89 | 5.56 | — | |
| Synopsys Inc. | 44.06 | 1,106.08 | 657.96 | 240.38 | 125.16 | 47.79 | |
| Workday Inc. | 4.12 | -1.54 | 1.97 | -3.00 | -7.22 | — | |
| Interest Coverage, Sector | |||||||
| Software & Services | 17.98 | 17.22 | 18.09 | 17.35 | 13.97 | — | |
| Interest Coverage, Industry | |||||||
| Information Technology | 19.55 | 17.69 | 22.65 | 19.92 | 14.14 | — | |
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
Interest coverage = EBIT ÷ Interest expense
= 110,722 ÷ 2,935 = 37.72
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- EBIT displayed a continuous increasing trend over the six-year period. Starting at 46,374 million USD in 2019, EBIT rose steadily each year, reaching 110,722 million USD in 2024. The growth was notably strong from 2020 to 2024, with significant annual increments especially after 2021, indicating enhanced operational performance and profitability.
- Interest expense
- Interest expense decreased from 2,686 million USD in 2019 to 1,968 million USD in 2023, showing an encouraging reduction in borrowing costs or debt levels. However, in 2024, interest expense increased again to 2,935 million USD. This rise may point to increased borrowing or changes in interest rates in the latest period.
- Interest coverage ratio
- The interest coverage ratio improved markedly, reflecting the company's increasing ability to meet interest obligations through operating earnings. It increased from 17.27 in 2019 to a peak of 46.38 in 2023, demonstrating strong earnings growth relative to interest expense. In 2024, the ratio declined to 37.72, which, while lower than the prior year, still indicates a robust capacity to cover interest payments.
Fixed Charge Coverage
Microsoft Corp., fixed charge coverage calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 88,136) | 72,361) | 72,738) | 61,271) | 44,281) | 39,240) | |
| Add: Income tax expense | 19,651) | 16,950) | 10,978) | 9,831) | 8,755) | 4,448) | |
| Add: Interest expense | 2,935) | 1,968) | 2,063) | 2,346) | 2,591) | 2,686) | |
| Earnings before interest and tax (EBIT) | 110,722) | 91,279) | 85,779) | 73,448) | 55,627) | 46,374) | |
| Add: Operating lease cost | 3,555) | 2,875) | 2,461) | 2,127) | 2,043) | 1,707) | |
| Earnings before fixed charges and tax | 114,277) | 94,154) | 88,240) | 75,575) | 57,670) | 48,081) | |
| Interest expense | 2,935) | 1,968) | 2,063) | 2,346) | 2,591) | 2,686) | |
| Operating lease cost | 3,555) | 2,875) | 2,461) | 2,127) | 2,043) | 1,707) | |
| Fixed charges | 6,490) | 4,843) | 4,524) | 4,473) | 4,634) | 4,393) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 17.61 | 19.44 | 19.50 | 16.90 | 12.44 | 10.94 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Accenture PLC | 13.46 | 10.98 | 12.25 | 10.41 | 9.66 | 10.07 | |
| Adobe Inc. | 26.20 | 30.56 | 26.79 | 25.59 | 18.77 | 10.78 | |
| Cadence Design Systems Inc. | 11.13 | 14.79 | 15.50 | 13.77 | 11.46 | — | |
| CrowdStrike Holdings Inc. | 3.98 | -3.39 | -3.39 | -6.40 | -12.01 | — | |
| Fair Isaac Corp. | 6.35 | 5.94 | 6.39 | 8.93 | 4.91 | 4.52 | |
| International Business Machines Corp. | 3.13 | 4.32 | 1.52 | 3.13 | 2.62 | — | |
| Intuit Inc. | 11.14 | 9.03 | 14.67 | 25.58 | 27.48 | 34.00 | |
| Oracle Corp. | 3.55 | 3.12 | 3.22 | 5.17 | 5.68 | — | |
| Palantir Technologies Inc. | 9.48 | 4.62 | -5.06 | -7.89 | -16.41 | — | |
| Palo Alto Networks Inc. | 12.78 | 7.20 | -1.18 | -1.09 | -0.52 | 0.41 | |
| Salesforce Inc. | 4.74 | 1.51 | 2.18 | 2.92 | 1.68 | — | |
| ServiceNow Inc. | 12.36 | 7.59 | 3.87 | 2.95 | 2.29 | — | |
| Synopsys Inc. | 12.88 | 14.38 | 12.91 | 9.29 | 7.46 | 6.30 | |
| Workday Inc. | 2.60 | -0.29 | 1.15 | -0.69 | -2.35 | — | |
| Fixed Charge Coverage, Sector | |||||||
| Software & Services | 9.99 | 9.48 | 9.44 | 9.23 | 7.43 | — | |
| Fixed Charge Coverage, Industry | |||||||
| Information Technology | 12.44 | 11.34 | 13.44 | 12.21 | 9.04 | — | |
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
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 114,277 ÷ 6,490 = 17.61
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax demonstrate a consistent upward trend over the analyzed period. Starting at 48,081 million USD in June 2019, the figure increased each year, reaching 114,277 million USD by June 2024. This represents a more than doubling of earnings in five years, indicating strong growth in core operational profitability before considering fixed financial obligations.
- Fixed charges
- Fixed charges show a relatively stable pattern with slight fluctuations over the period. Beginning at 4,393 million USD in 2019, fixed charges slightly increased through 2020 and 2023, ending markedly higher at 6,490 million USD in 2024. While the increase is noticeable in the final year, fixed charges have remained comparatively moderate relative to earnings before fixed charges and tax.
- Fixed charge coverage ratio
- The fixed charge coverage ratio, which indicates the ability to cover fixed charges through earnings, improved significantly from 10.94 in 2019 to a peak of 19.5 in 2022. This suggests an increasing margin of safety in covering fixed financial obligations. Although the ratio slightly declined to 17.61 by 2024, it remains substantially higher than in the initial years, reflecting strong financial health and capacity to service fixed costs.