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: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
A consistent improvement in solvency and a systemic reduction in financial leverage are observed across the analyzed period from June 30, 2021, to June 30, 2026. The overall trend indicates a strategic shift toward a more conservative capital structure, characterized by a reduction in debt reliance relative to equity and assets.
- Debt Leverage Ratios
- A steady downward trajectory is evident across all primary leverage metrics. The debt-to-equity ratio decreased from 0.50 in 2021 to a projected 0.24 by 2026. This trend remains consistent when including operating lease liabilities, which fell from 0.58 to 0.29 over the same period. Similarly, the debt-to-capital ratio declined from 0.33 to 0.19, and the debt-to-assets ratio saw a reduction from 0.21 to 0.14. These patterns suggest a sustained reduction in the company's total debt burden relative to its capital base and asset holdings.
- Financial Leverage
- The financial leverage ratio exhibits a continuous decline, moving from 2.35 in 2021 to 1.71 in 2026. This contraction indicates a diminishing reliance on borrowed funds to finance the acquisition of assets, thereby reducing the overall financial risk profile of the organization.
- Coverage Capabilities
- The capacity to service debt obligations remains exceptionally strong. The interest coverage ratio increased significantly from 31.31 in 2021 to 55.39 in 2026, despite a temporary fluctuation in 2024. This substantial growth indicates an increasing margin of safety for interest payments. The fixed charge coverage ratio remained relatively stable, oscillating between 16.63 and 19.50, confirming a consistent and robust ability to meet fixed financial commitments.
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Debt Ratios
Coverage Ratios
Debt to Equity
Microsoft Corp., debt to equity calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | —) | 6,693) | —) | —) | —) | |
| Current portion of long-term debt | 9,227) | 2,999) | 2,249) | 5,247) | 2,749) | 8,072) | |
| Current finance lease liabilities | 4,290) | 3,172) | 2,349) | 1,197) | 1,060) | 791) | |
| Long-term debt, excluding current portion | 31,067) | 40,152) | 42,688) | 41,990) | 47,032) | 50,074) | |
| Long-term finance lease liabilities | 62,304) | 43,000) | 24,796) | 15,870) | 13,842) | 11,750) | |
| Total debt | 106,888) | 89,323) | 78,775) | 64,304) | 64,683) | 70,687) | |
| Stockholders’ equity | 442,387) | 343,479) | 268,477) | 206,223) | 166,542) | 141,988) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.24 | 0.26 | 0.29 | 0.31 | 0.39 | 0.50 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Accenture PLC | — | 0.17 | 0.04 | 0.01 | 0.00 | 0.00 | |
| Adobe Inc. | — | 0.53 | 0.40 | 0.22 | 0.29 | 0.28 | |
| AppLovin Corp. | — | 1.70 | 3.36 | 2.61 | 1.72 | 1.53 | |
| Cadence Design Systems Inc. | — | 0.45 | 0.53 | 0.19 | 0.27 | 0.13 | |
| CrowdStrike Holdings Inc. | 0.17 | 0.23 | 0.32 | 0.51 | 0.72 | 0.85 | |
| Datadog Inc. | — | 0.26 | 0.59 | 0.37 | 0.52 | 0.71 | |
| International Business Machines Corp. | — | 1.88 | 2.01 | 2.51 | 2.32 | 2.74 | |
| Intuit Inc. | — | 0.30 | 0.33 | 0.35 | 0.42 | 0.21 | |
| Oracle Corp. | 3.23 | 4.67 | 9.98 | 84.33 | — | 16.08 | |
| Palantir Technologies Inc. | — | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Palo Alto Networks Inc. | — | 0.00 | 0.19 | 1.14 | 17.51 | 5.08 | |
| Salesforce Inc. | 0.25 | 0.15 | 0.17 | 0.20 | 0.19 | 0.07 | |
| ServiceNow Inc. | — | 0.12 | 0.15 | 0.20 | 0.30 | 0.43 | |
| Synopsys Inc. | — | 0.48 | 0.00 | 0.00 | 0.00 | 0.02 | |
| Workday Inc. | 0.38 | 0.33 | 0.37 | 0.53 | 0.41 | 0.55 | |
| Debt to Equity, Sector | |||||||
| Software & Services | — | 0.50 | 0.55 | 0.64 | 0.71 | 0.83 | |
| Debt to Equity, Industry | |||||||
| Information Technology | — | 0.53 | 0.62 | 0.66 | 0.71 | 0.83 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 106,888 ÷ 442,387 = 0.24
2 Click competitor name to see calculations.
An analysis of the solvency ratios indicates a sustained improvement in the financial structure over the observed period from 2021 to 2026. While absolute debt levels exhibit an upward trajectory in the latter years, the growth in stockholders' equity significantly outpaces the accumulation of debt, leading to a strengthened overall solvency profile.
- Total Debt Evolution
- Total debt experienced a slight decrease between 2021 and 2023, falling from 70,687 million to 64,304 million US$. However, a consistent increase is observed from 2024 onward, with the total rising to 106,888 million US$ by 2026. This indicates a strategic increase in borrowing during the latter half of the period.
- Stockholders' Equity Growth
- A robust and uninterrupted expansion of stockholders' equity is evident, increasing from 141,988 million US$ in 2021 to 442,387 million US$ by 2026. This rapid growth in equity provides a substantial cushion against liabilities and suggests strong retained earnings or capital infusions.
- Debt to Equity Ratio Trend
- The debt to equity ratio demonstrates a continuous downward trajectory, declining from 0.50 in 2021 to 0.24 in 2026. Despite the increase in nominal debt after 2023, the ratio continues to fall because equity growth is accelerating at a much faster rate. This trend reflects a reduction in financial leverage and a decreased reliance on external debt to finance assets.
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Debt to Equity (including Operating Lease Liability)
Microsoft Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | —) | 6,693) | —) | —) | —) | |
| Current portion of long-term debt | 9,227) | 2,999) | 2,249) | 5,247) | 2,749) | 8,072) | |
| Current finance lease liabilities | 4,290) | 3,172) | 2,349) | 1,197) | 1,060) | 791) | |
| Long-term debt, excluding current portion | 31,067) | 40,152) | 42,688) | 41,990) | 47,032) | 50,074) | |
| Long-term finance lease liabilities | 62,304) | 43,000) | 24,796) | 15,870) | 13,842) | 11,750) | |
| Total debt | 106,888) | 89,323) | 78,775) | 64,304) | 64,683) | 70,687) | |
| Operating lease liabilities (included in Other current liabilities) | 5,393) | 5,424) | 3,580) | 2,409) | 2,228) | 1,962) | |
| Long-term operating lease liabilities | 16,532) | 17,437) | 15,497) | 12,728) | 11,489) | 9,629) | |
| Total debt (including operating lease liability) | 128,813) | 112,184) | 97,852) | 79,441) | 78,400) | 82,278) | |
| Stockholders’ equity | 442,387) | 343,479) | 268,477) | 206,223) | 166,542) | 141,988) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 0.29 | 0.33 | 0.36 | 0.39 | 0.47 | 0.58 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Accenture PLC | — | 0.26 | 0.15 | 0.12 | 0.15 | 0.18 | |
| Adobe Inc. | — | 0.57 | 0.43 | 0.25 | 0.33 | 0.32 | |
| AppLovin Corp. | — | 1.72 | 3.41 | 2.66 | 1.76 | 1.57 | |
| Cadence Design Systems Inc. | — | 0.49 | 0.56 | 0.24 | 0.34 | 0.18 | |
| CrowdStrike Holdings Inc. | 0.19 | 0.24 | 0.34 | 0.54 | 0.76 | 0.89 | |
| Datadog Inc. | — | 0.34 | 0.68 | 0.45 | 0.59 | 0.78 | |
| International Business Machines Corp. | — | 1.98 | 2.14 | 2.66 | 2.46 | 2.92 | |
| Intuit Inc. | — | 0.34 | 0.36 | 0.39 | 0.46 | 0.25 | |
| Oracle Corp. | 3.94 | 5.33 | 10.85 | 88.84 | — | 16.61 | |
| Palantir Technologies Inc. | — | 0.03 | 0.05 | 0.07 | 0.10 | 0.11 | |
| Palo Alto Networks Inc. | — | 0.05 | 0.27 | 1.33 | 19.12 | 5.68 | |
| Salesforce Inc. | 0.30 | 0.20 | 0.23 | 0.25 | 0.25 | 0.15 | |
| ServiceNow Inc. | — | 0.19 | 0.24 | 0.30 | 0.44 | 0.60 | |
| Synopsys Inc. | — | 0.50 | 0.08 | 0.11 | 0.12 | 0.13 | |
| Workday Inc. | 0.49 | 0.37 | 0.41 | 0.58 | 0.46 | 0.68 | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Software & Services | — | 0.58 | 0.63 | 0.73 | 0.81 | 0.93 | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Information Technology | — | 0.58 | 0.68 | 0.73 | 0.77 | 0.91 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 128,813 ÷ 442,387 = 0.29
2 Click competitor name to see calculations.
The solvency profile demonstrates a consistent improvement in the leverage position over the analyzed period. While total liabilities have increased in absolute terms, the growth rate of equity has significantly exceeded that of debt, leading to a sustained reduction in the debt-to-equity ratio.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, experienced a marginal decline between 2021 and 2022, followed by a period of steady escalation. From 2023 to 2026, debt rose from 79,441 million to 128,813 million, indicating an increase in absolute borrowing and lease obligations.
- Equity Growth Performance
- Stockholders' equity exhibited robust and accelerating growth throughout the period. Starting at 141,988 million in 2021, equity expanded to 442,387 million by 2026, reflecting a strong internal capacity for capital generation and retention.
- Debt to Equity Ratio Analysis
- A consistent downward trend is observed in the debt to equity ratio, which declined from 0.58 in 2021 to 0.29 in 2026. This progression confirms that the expansion of stockholders' equity is significantly outpacing the growth of total debt, thereby reducing long-term financial risk and enhancing the overall solvency position.
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Debt to Capital
Microsoft Corp., debt to capital calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | —) | 6,693) | —) | —) | —) | |
| Current portion of long-term debt | 9,227) | 2,999) | 2,249) | 5,247) | 2,749) | 8,072) | |
| Current finance lease liabilities | 4,290) | 3,172) | 2,349) | 1,197) | 1,060) | 791) | |
| Long-term debt, excluding current portion | 31,067) | 40,152) | 42,688) | 41,990) | 47,032) | 50,074) | |
| Long-term finance lease liabilities | 62,304) | 43,000) | 24,796) | 15,870) | 13,842) | 11,750) | |
| Total debt | 106,888) | 89,323) | 78,775) | 64,304) | 64,683) | 70,687) | |
| Stockholders’ equity | 442,387) | 343,479) | 268,477) | 206,223) | 166,542) | 141,988) | |
| Total capital | 549,275) | 432,802) | 347,252) | 270,527) | 231,225) | 212,675) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.19 | 0.21 | 0.23 | 0.24 | 0.28 | 0.33 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Accenture PLC | — | 0.14 | 0.03 | 0.01 | 0.00 | 0.00 | |
| Adobe Inc. | — | 0.35 | 0.29 | 0.18 | 0.23 | 0.22 | |
| AppLovin Corp. | — | 0.63 | 0.77 | 0.72 | 0.63 | 0.60 | |
| Cadence Design Systems Inc. | — | 0.31 | 0.35 | 0.16 | 0.21 | 0.11 | |
| CrowdStrike Holdings Inc. | 0.14 | 0.18 | 0.24 | 0.34 | 0.42 | 0.46 | |
| Datadog Inc. | — | 0.21 | 0.37 | 0.27 | 0.34 | 0.41 | |
| International Business Machines Corp. | — | 0.65 | 0.67 | 0.72 | 0.70 | 0.73 | |
| Intuit Inc. | — | 0.23 | 0.25 | 0.26 | 0.30 | 0.17 | |
| Oracle Corp. | 0.76 | 0.82 | 0.91 | 0.99 | 1.09 | 0.94 | |
| Palantir Technologies Inc. | — | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Palo Alto Networks Inc. | — | 0.00 | 0.16 | 0.53 | 0.95 | 0.84 | |
| Salesforce Inc. | 0.20 | 0.13 | 0.15 | 0.16 | 0.16 | 0.06 | |
| ServiceNow Inc. | — | 0.10 | 0.13 | 0.16 | 0.23 | 0.30 | |
| Synopsys Inc. | — | 0.32 | 0.00 | 0.00 | 0.00 | 0.02 | |
| Workday Inc. | 0.28 | 0.25 | 0.27 | 0.35 | 0.29 | 0.35 | |
| Debt to Capital, Sector | |||||||
| Software & Services | — | 0.33 | 0.35 | 0.39 | 0.42 | 0.45 | |
| Debt to Capital, Industry | |||||||
| Information Technology | — | 0.34 | 0.38 | 0.40 | 0.41 | 0.45 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Debt to capital = Total debt ÷ Total capital
= 106,888 ÷ 549,275 = 0.19
2 Click competitor name to see calculations.
The solvency profile exhibits a consistent strengthening trend over the period from June 30, 2021, to June 30, 2026. While absolute debt levels have fluctuated and eventually risen, the relative proportion of debt within the total capital structure has declined steadily, indicating an improvement in long-term financial stability.
- Total Debt Trajectory
- An initial decline in total debt is observed between 2021 and 2023, moving from 70,687 million to 64,304 million. Subsequently, a growth phase began in 2024, with debt levels rising to 78,775 million and reaching 106,888 million by June 30, 2026.
- Total Capital Expansion
- Total capital demonstrates a continuous and accelerating upward trend throughout the analyzed period. Starting at 212,675 million in 2021, the capital base expanded significantly to 549,275 million by 2026, reflecting a substantial increase in the company's total funding sources.
- Debt to Capital Ratio Interpretation
- The debt to capital ratio shows a persistent downward trajectory, decreasing from 0.33 in 2021 to 0.19 in 2026. This consistent decline occurs despite the increase in total debt observed after 2023, confirming that the expansion of total capital has significantly outpaced the growth of debt obligations.
The overall analysis reveals a strategic shift toward a less leveraged capital structure. The reduction in the debt to capital ratio suggests a diminished reliance on borrowed funds relative to total capital, thereby enhancing the organization's solvency position over the six-year period.
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Debt to Capital (including Operating Lease Liability)
Microsoft Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | —) | 6,693) | —) | —) | —) | |
| Current portion of long-term debt | 9,227) | 2,999) | 2,249) | 5,247) | 2,749) | 8,072) | |
| Current finance lease liabilities | 4,290) | 3,172) | 2,349) | 1,197) | 1,060) | 791) | |
| Long-term debt, excluding current portion | 31,067) | 40,152) | 42,688) | 41,990) | 47,032) | 50,074) | |
| Long-term finance lease liabilities | 62,304) | 43,000) | 24,796) | 15,870) | 13,842) | 11,750) | |
| Total debt | 106,888) | 89,323) | 78,775) | 64,304) | 64,683) | 70,687) | |
| Operating lease liabilities (included in Other current liabilities) | 5,393) | 5,424) | 3,580) | 2,409) | 2,228) | 1,962) | |
| Long-term operating lease liabilities | 16,532) | 17,437) | 15,497) | 12,728) | 11,489) | 9,629) | |
| Total debt (including operating lease liability) | 128,813) | 112,184) | 97,852) | 79,441) | 78,400) | 82,278) | |
| Stockholders’ equity | 442,387) | 343,479) | 268,477) | 206,223) | 166,542) | 141,988) | |
| Total capital (including operating lease liability) | 571,200) | 455,663) | 366,329) | 285,664) | 244,942) | 224,266) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.23 | 0.25 | 0.27 | 0.28 | 0.32 | 0.37 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Accenture PLC | — | 0.21 | 0.13 | 0.11 | 0.13 | 0.15 | |
| Adobe Inc. | — | 0.36 | 0.30 | 0.20 | 0.25 | 0.24 | |
| AppLovin Corp. | — | 0.63 | 0.77 | 0.73 | 0.64 | 0.61 | |
| Cadence Design Systems Inc. | — | 0.33 | 0.36 | 0.19 | 0.25 | 0.15 | |
| CrowdStrike Holdings Inc. | 0.16 | 0.19 | 0.26 | 0.35 | 0.43 | 0.47 | |
| Datadog Inc. | — | 0.26 | 0.40 | 0.31 | 0.37 | 0.44 | |
| International Business Machines Corp. | — | 0.66 | 0.68 | 0.73 | 0.71 | 0.74 | |
| Intuit Inc. | — | 0.25 | 0.26 | 0.28 | 0.31 | 0.20 | |
| Oracle Corp. | 0.80 | 0.84 | 0.92 | 0.99 | 1.08 | 0.94 | |
| Palantir Technologies Inc. | — | 0.03 | 0.05 | 0.06 | 0.09 | 0.10 | |
| Palo Alto Networks Inc. | — | 0.05 | 0.21 | 0.57 | 0.95 | 0.85 | |
| Salesforce Inc. | 0.23 | 0.16 | 0.19 | 0.20 | 0.20 | 0.13 | |
| ServiceNow Inc. | — | 0.16 | 0.19 | 0.23 | 0.31 | 0.37 | |
| Synopsys Inc. | — | 0.34 | 0.07 | 0.10 | 0.11 | 0.11 | |
| Workday Inc. | 0.33 | 0.27 | 0.29 | 0.37 | 0.32 | 0.41 | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Software & Services | — | 0.37 | 0.39 | 0.42 | 0.45 | 0.48 | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Information Technology | — | 0.37 | 0.40 | 0.42 | 0.44 | 0.48 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 128,813 ÷ 571,200 = 0.23
2 Click competitor name to see calculations.
The financial data indicates a consistent improvement in the solvency profile of the organization between June 30, 2021, and June 30, 2026. While absolute debt levels exhibit an upward trajectory in the latter part of the period, the growth in total capital significantly outweighs this increase, resulting in a steady decline in the debt-to-capital ratio.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained relatively stable between 2021 and 2023, fluctuating between US$ 78,400 million and US$ 82,278 million. A period of accelerated debt accumulation is observed from June 30, 2024, through June 30, 2026, with the balance increasing to US$ 128,813 million by the end of the analyzed period.
- Total Capital Expansion
- Total capital demonstrates robust and uninterrupted growth, increasing from US$ 224,266 million in 2021 to US$ 571,200 million by June 30, 2026. This substantial expansion of the total capital base indicates a significant increase in internal funding or equity, which effectively offsets the rise in liabilities.
- Debt to Capital Ratio Analysis
- The debt-to-capital ratio shows a continuous downward trend, decreasing from 0.37 in 2021 to 0.23 by 2026. This contraction signifies a strategic shift toward a more equity-heavy capital structure and a reduced reliance on leverage relative to total capital. Despite the increase in absolute debt after 2023, the ratio continued to fall, confirming that capital growth outperformed debt growth throughout the entire timeframe.
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Debt to Assets
Microsoft Corp., debt to assets calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | —) | 6,693) | —) | —) | —) | |
| Current portion of long-term debt | 9,227) | 2,999) | 2,249) | 5,247) | 2,749) | 8,072) | |
| Current finance lease liabilities | 4,290) | 3,172) | 2,349) | 1,197) | 1,060) | 791) | |
| Long-term debt, excluding current portion | 31,067) | 40,152) | 42,688) | 41,990) | 47,032) | 50,074) | |
| Long-term finance lease liabilities | 62,304) | 43,000) | 24,796) | 15,870) | 13,842) | 11,750) | |
| Total debt | 106,888) | 89,323) | 78,775) | 64,304) | 64,683) | 70,687) | |
| Total assets | 758,376) | 619,003) | 512,163) | 411,976) | 364,840) | 333,779) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.14 | 0.14 | 0.15 | 0.16 | 0.18 | 0.21 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Accenture PLC | — | 0.08 | 0.02 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | — | 0.21 | 0.19 | 0.12 | 0.15 | 0.15 | |
| AppLovin Corp. | — | 0.50 | 0.62 | 0.61 | 0.56 | 0.53 | |
| Cadence Design Systems Inc. | — | 0.24 | 0.28 | 0.11 | 0.15 | 0.08 | |
| CrowdStrike Holdings Inc. | 0.07 | 0.09 | 0.11 | 0.15 | 0.20 | 0.27 | |
| Datadog Inc. | — | 0.15 | 0.28 | 0.19 | 0.25 | 0.31 | |
| International Business Machines Corp. | — | 0.40 | 0.40 | 0.42 | 0.40 | 0.39 | |
| Intuit Inc. | — | 0.16 | 0.19 | 0.22 | 0.25 | 0.13 | |
| Oracle Corp. | 0.52 | 0.57 | 0.62 | 0.67 | 0.69 | 0.64 | |
| Palantir Technologies Inc. | — | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Palo Alto Networks Inc. | — | 0.00 | 0.05 | 0.14 | 0.30 | 0.31 | |
| Salesforce Inc. | 0.13 | 0.09 | 0.10 | 0.12 | 0.12 | 0.04 | |
| ServiceNow Inc. | — | 0.06 | 0.07 | 0.09 | 0.11 | 0.15 | |
| Synopsys Inc. | — | 0.28 | 0.00 | 0.00 | 0.00 | 0.01 | |
| Workday Inc. | 0.17 | 0.17 | 0.18 | 0.22 | 0.18 | 0.21 | |
| Debt to Assets, Sector | |||||||
| Software & Services | — | 0.22 | 0.23 | 0.25 | 0.26 | 0.28 | |
| Debt to Assets, Industry | |||||||
| Information Technology | — | 0.23 | 0.25 | 0.26 | 0.26 | 0.29 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Debt to assets = Total debt ÷ Total assets
= 106,888 ÷ 758,376 = 0.14
2 Click competitor name to see calculations.
The solvency profile demonstrates a consistent strengthening of the financial position between June 30, 2021, and June 30, 2026. While absolute debt levels fluctuate and eventually increase, the growth rate of total assets significantly outpaces the accumulation of debt, resulting in a lowered overall leverage ratio.
- Total Debt Trends
- A period of moderate contraction occurred between 2021 and 2023, with total debt decreasing from US$ 70,687 million to US$ 64,304 million. This was followed by a consistent upward trend starting in 2024, with total debt increasing to US$ 106,888 million by June 30, 2026.
- Total Asset Expansion
- Total assets exhibit an aggressive and uninterrupted upward trajectory throughout the analyzed period. The asset base grew from US$ 333,779 million in 2021 to US$ 758,376 million by 2026, indicating substantial organizational growth.
- Debt to Assets Ratio Interpretation
- The debt to assets ratio reflects a steady decline from 0.21 in 2021 to 0.14 in 2025, where it remained stable through 2026. This compression of the ratio confirms that the expansion of the asset base occurred at a higher velocity than the increase in liabilities, thereby reducing the relative reliance on debt to finance total assets and improving the overall solvency margin.
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Debt to Assets (including Operating Lease Liability)
Microsoft Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term debt | —) | —) | 6,693) | —) | —) | —) | |
| Current portion of long-term debt | 9,227) | 2,999) | 2,249) | 5,247) | 2,749) | 8,072) | |
| Current finance lease liabilities | 4,290) | 3,172) | 2,349) | 1,197) | 1,060) | 791) | |
| Long-term debt, excluding current portion | 31,067) | 40,152) | 42,688) | 41,990) | 47,032) | 50,074) | |
| Long-term finance lease liabilities | 62,304) | 43,000) | 24,796) | 15,870) | 13,842) | 11,750) | |
| Total debt | 106,888) | 89,323) | 78,775) | 64,304) | 64,683) | 70,687) | |
| Operating lease liabilities (included in Other current liabilities) | 5,393) | 5,424) | 3,580) | 2,409) | 2,228) | 1,962) | |
| Long-term operating lease liabilities | 16,532) | 17,437) | 15,497) | 12,728) | 11,489) | 9,629) | |
| Total debt (including operating lease liability) | 128,813) | 112,184) | 97,852) | 79,441) | 78,400) | 82,278) | |
| Total assets | 758,376) | 619,003) | 512,163) | 411,976) | 364,840) | 333,779) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.17 | 0.18 | 0.19 | 0.19 | 0.21 | 0.25 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Accenture PLC | — | 0.13 | 0.07 | 0.06 | 0.07 | 0.08 | |
| Adobe Inc. | — | 0.23 | 0.20 | 0.14 | 0.17 | 0.17 | |
| AppLovin Corp. | — | 0.51 | 0.63 | 0.62 | 0.57 | 0.54 | |
| Cadence Design Systems Inc. | — | 0.26 | 0.29 | 0.14 | 0.18 | 0.11 | |
| CrowdStrike Holdings Inc. | 0.07 | 0.09 | 0.12 | 0.16 | 0.21 | 0.29 | |
| Datadog Inc. | — | 0.19 | 0.32 | 0.23 | 0.28 | 0.34 | |
| International Business Machines Corp. | — | 0.43 | 0.43 | 0.44 | 0.42 | 0.42 | |
| Intuit Inc. | — | 0.18 | 0.20 | 0.24 | 0.27 | 0.16 | |
| Oracle Corp. | 0.64 | 0.65 | 0.67 | 0.71 | 0.73 | 0.66 | |
| Palantir Technologies Inc. | — | 0.03 | 0.04 | 0.05 | 0.07 | 0.08 | |
| Palo Alto Networks Inc. | — | 0.02 | 0.07 | 0.16 | 0.33 | 0.35 | |
| Salesforce Inc. | 0.16 | 0.12 | 0.14 | 0.15 | 0.15 | 0.10 | |
| ServiceNow Inc. | — | 0.09 | 0.11 | 0.13 | 0.17 | 0.21 | |
| Synopsys Inc. | — | 0.30 | 0.05 | 0.07 | 0.07 | 0.08 | |
| Workday Inc. | 0.21 | 0.19 | 0.20 | 0.24 | 0.20 | 0.26 | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Software & Services | — | 0.26 | 0.27 | 0.29 | 0.30 | 0.32 | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Information Technology | — | 0.26 | 0.28 | 0.28 | 0.29 | 0.31 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 128,813 ÷ 758,376 = 0.17
2 Click competitor name to see calculations.
The analysis of solvency metrics indicates a consistent improvement in the company's financial leverage position over the period from June 30, 2021, to June 30, 2026. While total debt has increased in absolute terms, the rate of asset accumulation has significantly outpaced the growth of liabilities, leading to a sustained reduction in the debt-to-assets ratio.
- Total Debt Evolution
- Total debt, including operating lease liabilities, exhibits a steady upward trend, rising from 82,278 million US dollars in 2021 to a projected 128,813 million US dollars by 2026. This represents a substantial increase in nominal obligations over the six-year horizon.
- Asset Growth Velocity
- Total assets have grown at a much more aggressive pace than debt. Starting at 333,779 million US dollars in 2021, assets are projected to reach 758,376 million US dollars by 2026. The scale of asset expansion effectively dilutes the impact of the increased debt load.
- Debt to Assets Ratio Trend
- The debt to assets ratio demonstrates a clear downward trajectory, decreasing from 0.25 in 2021 to 0.17 by 2026. The most significant reduction occurred between 2021 and 2023, where the ratio dropped from 0.25 to 0.19. Between 2023 and 2024, the ratio remained stable at 0.19 before continuing its decline toward 0.17.
- Solvency Insight
- The widening gap between asset growth and debt accumulation suggests a strengthening of the balance sheet. The reduction in the debt-to-assets ratio indicates that a smaller proportion of the company's assets is financed through debt, thereby reducing overall financial risk and enhancing long-term solvency.
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Financial Leverage
Microsoft Corp., financial leverage calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 758,376) | 619,003) | 512,163) | 411,976) | 364,840) | 333,779) | |
| Stockholders’ equity | 442,387) | 343,479) | 268,477) | 206,223) | 166,542) | 141,988) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 1.71 | 1.80 | 1.91 | 2.00 | 2.19 | 2.35 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Accenture PLC | — | 2.10 | 1.98 | 1.99 | 2.14 | 2.21 | |
| Adobe Inc. | — | 2.54 | 2.14 | 1.80 | 1.93 | 1.84 | |
| AppLovin Corp. | — | 3.40 | 5.39 | 4.27 | 3.07 | 2.88 | |
| Cadence Design Systems Inc. | — | 1.85 | 1.92 | 1.67 | 1.87 | 1.60 | |
| CrowdStrike Holdings Inc. | 2.50 | 2.65 | 2.88 | 3.43 | 3.53 | 3.14 | |
| Datadog Inc. | — | 1.78 | 2.13 | 1.94 | 2.13 | 2.29 | |
| International Business Machines Corp. | — | 4.65 | 5.02 | 6.00 | 5.80 | 6.98 | |
| Intuit Inc. | — | 1.88 | 1.74 | 1.61 | 1.69 | 1.57 | |
| Oracle Corp. | 6.16 | 8.23 | 16.20 | 125.24 | — | 25.03 | |
| Palantir Technologies Inc. | — | 1.20 | 1.27 | 1.30 | 1.35 | 1.42 | |
| Palo Alto Networks Inc. | — | 3.01 | 3.87 | 8.29 | 58.35 | 16.14 | |
| Salesforce Inc. | 1.90 | 1.68 | 1.67 | 1.69 | 1.64 | 1.60 | |
| ServiceNow Inc. | — | 2.01 | 2.12 | 2.28 | 2.64 | 2.92 | |
| Synopsys Inc. | — | 1.70 | 1.45 | 1.68 | 1.71 | 1.65 | |
| Workday Inc. | 2.32 | 1.99 | 2.04 | 2.41 | 2.31 | 2.66 | |
| Financial Leverage, Sector | |||||||
| Software & Services | — | 2.22 | 2.35 | 2.55 | 2.72 | 2.95 | |
| Financial Leverage, Industry | |||||||
| Information Technology | — | 2.25 | 2.46 | 2.55 | 2.68 | 2.89 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 758,376 ÷ 442,387 = 1.71
2 Click competitor name to see calculations.
A consistent expansion of the balance sheet is observed from June 30, 2021, through June 30, 2026. While total assets have grown substantially over this period, the proportional increase in stockholders' equity has outpaced asset growth, resulting in a progressive decline in the financial leverage ratio. This trajectory indicates a strengthening solvency position and a reduced reliance on debt to finance organizational growth.
- Total Asset Growth
- Total assets exhibit a strong upward trend, increasing from 333,779 million US dollars in 2021 to 758,376 million US dollars by 2026. This represents a significant accumulation of resources over the six-year period.
- Stockholders' Equity Expansion
- Equity has increased consistently from 141,988 million US dollars in 2021 to 442,387 million US dollars in 2026. The acceleration in equity growth suggests strong retained earnings or capital contributions, which provide a larger cushion for creditors.
- Financial Leverage Trend
- The financial leverage ratio demonstrates a steady downward trajectory, moving from 2.35 in 2021 to 1.71 in 2026. This decline signifies a shift toward a more conservative capital structure, where a greater portion of assets is financed by equity rather than liabilities.
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Interest Coverage
Microsoft Corp., interest coverage calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 133,749) | 101,832) | 88,136) | 72,361) | 72,738) | 61,271) | |
| Add: Income tax expense | 32,185) | 21,795) | 19,651) | 16,950) | 10,978) | 9,831) | |
| Add: Interest expense | 3,051) | 2,385) | 2,935) | 1,968) | 2,063) | 2,346) | |
| Earnings before interest and tax (EBIT) | 168,985) | 126,012) | 110,722) | 91,279) | 85,779) | 73,448) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 55.39 | 52.84 | 37.72 | 46.38 | 41.58 | 31.31 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Accenture PLC | — | 45.94 | 165.48 | 193.31 | 195.34 | 131.46 | |
| Adobe Inc. | — | 34.21 | 42.01 | 61.17 | 54.64 | 51.49 | |
| AppLovin Corp. | — | 20.09 | 5.95 | 2.38 | -0.19 | 1.45 | |
| Cadence Design Systems Inc. | — | 14.06 | 19.37 | 36.43 | 46.58 | 46.26 | |
| CrowdStrike Holdings Inc. | -3.53 | 3.07 | 5.77 | -5.31 | -5.34 | -55.36 | |
| Datadog Inc. | — | 12.49 | 29.85 | 10.56 | -1.30 | 0.12 | |
| International Business Machines Corp. | — | 6.35 | 4.40 | 6.42 | 1.97 | 5.20 | |
| Intuit Inc. | — | 20.57 | 15.67 | 13.05 | 32.38 | 89.14 | |
| Oracle Corp. | 5.30 | 5.01 | 4.39 | 3.65 | 3.84 | 6.28 | |
| Palantir Technologies Inc. | — | — | — | 69.33 | -87.97 | -133.20 | |
| Palo Alto Networks Inc. | — | 532.90 | 120.07 | 21.82 | -6.56 | -1.85 | |
| Salesforce Inc. | 30.38 | 28.35 | 18.49 | 3.20 | 7.93 | 21.49 | |
| ServiceNow Inc. | — | 99.30 | 76.57 | 43.00 | 15.78 | 9.89 | |
| Synopsys Inc. | — | 4.12 | 44.06 | 1,106.08 | 657.96 | 240.38 | |
| Workday Inc. | 9.85 | 6.60 | 4.12 | -1.54 | 1.97 | -3.00 | |
| Interest Coverage, Sector | |||||||
| Software & Services | — | 20.56 | 17.70 | 16.84 | 17.69 | 17.08 | |
| Interest Coverage, Industry | |||||||
| Information Technology | — | 26.06 | 19.36 | 17.49 | 22.35 | 19.75 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Interest coverage = EBIT ÷ Interest expense
= 168,985 ÷ 3,051 = 55.39
2 Click competitor name to see calculations.
The analysis of solvency indicators reveals a robust capacity to meet interest obligations, characterized by significant operational growth and relatively stable financing costs over the observed six-year period.
- Earnings Before Interest and Tax (EBIT)
- A consistent and substantial upward trajectory is observed in EBIT, which increases from US$ 73,448 million in June 2021 to a projected US$ 168,985 million by June 2026. This sustained growth in operating profit indicates strong operational scaling and provides a substantial cushion for the servicing of debt.
- Interest Expense
- Interest expenses exhibit moderate fluctuations without a linear trend. After a period of decline between 2021 and 2023, a notable increase occurred in June 2024, reaching US$ 2,935 million. While expenses are projected to rise again to US$ 3,051 million by June 2026, the growth in interest costs is vastly outpaced by the growth in operating income.
- Interest Coverage Ratio
- The interest coverage ratio demonstrates an overall strengthening trend, rising from 31.31 in 2021 to 55.39 in 2026. A temporary decline is observed in June 2024, where the ratio dropped to 37.72 due to the simultaneous increase in interest expenses and a slower rate of EBIT growth relative to previous years. However, the ratio recovers significantly in 2025 and 2026, reflecting a highly secure solvency position and an increasing margin of safety regarding the company's ability to cover its interest payments from operating profits.
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Fixed Charge Coverage
Microsoft Corp., fixed charge coverage calculation, comparison to benchmarks
| Jun 30, 2026 | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income | 133,749) | 101,832) | 88,136) | 72,361) | 72,738) | 61,271) | |
| Add: Income tax expense | 32,185) | 21,795) | 19,651) | 16,950) | 10,978) | 9,831) | |
| Add: Interest expense | 3,051) | 2,385) | 2,935) | 1,968) | 2,063) | 2,346) | |
| Earnings before interest and tax (EBIT) | 168,985) | 126,012) | 110,722) | 91,279) | 85,779) | 73,448) | |
| Add: Operating lease cost | 6,968) | 5,524) | 3,555) | 2,875) | 2,461) | 2,127) | |
| Earnings before fixed charges and tax | 175,953) | 131,536) | 114,277) | 94,154) | 88,240) | 75,575) | |
| Interest expense | 3,051) | 2,385) | 2,935) | 1,968) | 2,063) | 2,346) | |
| Operating lease cost | 6,968) | 5,524) | 3,555) | 2,875) | 2,461) | 2,127) | |
| Fixed charges | 10,019) | 7,909) | 6,490) | 4,843) | 4,524) | 4,473) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 17.56 | 16.63 | 17.61 | 19.44 | 19.50 | 16.90 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Accenture PLC | — | 11.72 | 13.46 | 10.98 | 12.25 | 10.41 | |
| Adobe Inc. | — | 25.40 | 26.20 | 30.56 | 26.79 | 25.59 | |
| AppLovin Corp. | — | 18.93 | 5.73 | 2.30 | -0.07 | 1.35 | |
| Cadence Design Systems Inc. | — | 9.12 | 11.13 | 14.79 | 15.50 | 13.77 | |
| CrowdStrike Holdings Inc. | -1.64 | 2.25 | 3.98 | -3.39 | -3.39 | -6.40 | |
| Datadog Inc. | — | 2.93 | 5.09 | 2.47 | 0.09 | 0.55 | |
| International Business Machines Corp. | — | 4.50 | 3.13 | 4.32 | 1.52 | 3.13 | |
| Intuit Inc. | — | 14.50 | 11.14 | 9.03 | 14.67 | 25.58 | |
| Oracle Corp. | 3.61 | 3.71 | 3.55 | 3.12 | 3.22 | 5.17 | |
| Palantir Technologies Inc. | — | 29.99 | 9.48 | 4.62 | -5.06 | -7.89 | |
| Palo Alto Networks Inc. | — | 18.52 | 12.78 | 7.20 | -1.18 | -1.09 | |
| Salesforce Inc. | 11.15 | 8.78 | 4.74 | 1.51 | 2.18 | 2.92 | |
| ServiceNow Inc. | — | 14.30 | 12.36 | 7.59 | 3.87 | 2.95 | |
| Synopsys Inc. | — | 3.47 | 12.88 | 14.38 | 12.91 | 9.29 | |
| Workday Inc. | 4.67 | 3.69 | 2.60 | -0.29 | 1.15 | -0.69 | |
| Fixed Charge Coverage, Sector | |||||||
| Software & Services | — | 10.44 | 9.92 | 9.35 | 9.29 | 9.13 | |
| Fixed Charge Coverage, Industry | |||||||
| Information Technology | — | 15.43 | 12.35 | 11.24 | 13.31 | 12.13 | |
Based on: 10-K (reporting date: 2026-06-30), 10-K (reporting date: 2025-06-30), 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).
1 2026 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 175,953 ÷ 10,019 = 17.56
2 Click competitor name to see calculations.
The solvency analysis indicates a consistently strong capacity to meet fixed financial obligations, characterized by substantial earnings buffers throughout the observed period. While both earnings and fixed charges exhibit long-term growth, the fixed charge coverage ratio has experienced moderate fluctuations, reflecting varying rates of growth between operational income and fixed costs.
- Earnings before fixed charges and tax
- A sustained upward trajectory is observed, with values increasing from 75,575 million in 2021 to a projected 175,953 million by 2026. This represents a significant expansion in the financial resources available to service fixed obligations, with a particularly sharp increase projected between 2025 and 2026.
- Fixed charges
- Fixed charges demonstrate a continuous increase, rising from 4,473 million in 2021 to 10,019 million by 2026. The pace of this growth accelerated notably after 2023, indicating an increase in the company's fixed financial commitments over the latter half of the period.
- Fixed charge coverage ratio
- The coverage ratio peaked at 19.50 in 2022, followed by a period of gradual decline to a low of 16.63 in 2025. This contraction suggests that fixed charges grew at a proportionally faster rate than earnings during this interval. However, a recovery is projected for 2026, with the ratio expected to rise to 17.56, signaling a stabilization in the relationship between earnings and fixed costs.
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