Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Microsoft Corp., short-term (operating) activity ratios
Based on: 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), 10-K (reporting date: 2018-06-30).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Microsoft Corp. inventory turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Microsoft Corp. receivables turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Microsoft Corp. payables turnover ratio decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Microsoft Corp. working capital turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023. |
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Microsoft Corp. number of days of inventory outstanding deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Microsoft Corp. number of days of receivables outstanding improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Microsoft Corp. operating cycle deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Microsoft Corp. number of days of payables outstanding increased from 2021 to 2022 but then decreased significantly from 2022 to 2023. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Microsoft Corp. cash conversion cycle improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
Inventory Turnover
Microsoft Corp., inventory turnover calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cost of revenue | 65,863) | 62,650) | 52,232) | 46,078) | 42,910) | 38,353) | |
| Inventories | 2,500) | 3,742) | 2,636) | 1,895) | 2,063) | 2,662) | |
| Short-term Activity Ratio | |||||||
| Inventory turnover1 | 26.35 | 16.74 | 19.81 | 24.32 | 20.80 | 14.41 | |
| Benchmarks | |||||||
| Inventory Turnover, Competitors2 | |||||||
| International Business Machines Corp. | 23.74 | 17.94 | 15.68 | 20.69 | 25.11 | — | |
| Oracle Corp. | 45.52 | 28.27 | 55.32 | 37.62 | 24.98 | 20.30 | |
| Synopsys Inc. | 3.75 | 5.02 | 3.76 | 4.13 | 5.32 | 6.01 | |
| Inventory Turnover, Sector | |||||||
| Software & Services | 39.51 | 27.01 | 28.48 | 32.03 | 31.40 | — | |
| Inventory Turnover, Industry | |||||||
| Information Technology | 7.30 | 8.07 | 9.69 | 10.29 | 10.44 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Inventory turnover = Cost of revenue ÷ Inventories
= 65,863 ÷ 2,500 = 26.35
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Microsoft Corp. inventory turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level. |
Receivables Turnover
Microsoft Corp., receivables turnover calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Revenue | 211,915) | 198,270) | 168,088) | 143,015) | 125,843) | 110,360) | |
| Accounts receivable, net of allowance for doubtful accounts | 48,688) | 44,261) | 38,043) | 32,011) | 29,524) | 26,481) | |
| Short-term Activity Ratio | |||||||
| Receivables turnover1 | 4.35 | 4.48 | 4.42 | 4.47 | 4.26 | 4.17 | |
| Benchmarks | |||||||
| Receivables Turnover, Competitors2 | |||||||
| Accenture PLC | 6.00 | 5.87 | 5.74 | 6.16 | 5.79 | 8.33 | |
| Adobe Inc. | 8.73 | 8.53 | 8.41 | 9.20 | 7.28 | 6.86 | |
| International Business Machines Corp. | 8.57 | 9.25 | 8.49 | 10.32 | 9.80 | — | |
| Intuit Inc. | 35.48 | 28.53 | 24.64 | 51.54 | 77.98 | 60.86 | |
| Oracle Corp. | 7.22 | 7.13 | 7.48 | 7.04 | 7.69 | 7.55 | |
| Palo Alto Networks Inc. | 2.80 | 2.57 | 3.43 | 3.29 | 4.98 | 4.86 | |
| Salesforce Inc. | 2.92 | 2.72 | 2.73 | 2.77 | 2.70 | — | |
| ServiceNow Inc. | 4.41 | 4.20 | 4.24 | 4.48 | 4.14 | — | |
| Synopsys Inc. | 6.17 | 6.38 | 7.40 | 4.72 | 6.07 | 5.63 | |
| Receivables Turnover, Sector | |||||||
| Software & Services | 5.14 | 5.20 | 5.22 | 5.59 | 5.58 | — | |
| Receivables Turnover, Industry | |||||||
| Information Technology | 7.41 | 7.44 | 7.57 | 8.02 | 7.60 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Receivables turnover = Revenue ÷ Accounts receivable, net of allowance for doubtful accounts
= 211,915 ÷ 48,688 = 4.35
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Microsoft Corp. receivables turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
Payables Turnover
Microsoft Corp., payables turnover calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cost of revenue | 65,863) | 62,650) | 52,232) | 46,078) | 42,910) | 38,353) | |
| Accounts payable | 18,095) | 19,000) | 15,163) | 12,530) | 9,382) | 8,617) | |
| Short-term Activity Ratio | |||||||
| Payables turnover1 | 3.64 | 3.30 | 3.44 | 3.68 | 4.57 | 4.45 | |
| Benchmarks | |||||||
| Payables Turnover, Competitors2 | |||||||
| Accenture PLC | 17.41 | 16.37 | 15.03 | 22.48 | 18.16 | 21.62 | |
| Adobe Inc. | 7.50 | 5.71 | 5.98 | 5.63 | 7.98 | 6.42 | |
| International Business Machines Corp. | 6.67 | 6.87 | 6.54 | 7.75 | 8.30 | — | |
| Intuit Inc. | 4.93 | 3.26 | 2.70 | 4.52 | 4.26 | 5.49 | |
| Oracle Corp. | 11.27 | 6.74 | 10.54 | 12.46 | 13.78 | 15.28 | |
| Palo Alto Networks Inc. | 14.43 | 13.43 | 22.41 | 15.72 | 11.03 | 13.06 | |
| Salesforce Inc. | — | — | — | — | — | — | |
| ServiceNow Inc. | 15.25 | 5.74 | 15.20 | 28.83 | 15.04 | — | |
| Synopsys Inc. | 7.84 | 28.30 | 31.44 | 26.49 | 38.00 | 8.65 | |
| Payables Turnover, Sector | |||||||
| Software & Services | 6.20 | 5.52 | 5.70 | 6.57 | 7.59 | — | |
| Payables Turnover, Industry | |||||||
| Information Technology | 4.86 | 4.53 | 4.99 | 5.34 | 5.26 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Payables turnover = Cost of revenue ÷ Accounts payable
= 65,863 ÷ 18,095 = 3.64
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Microsoft Corp. payables turnover ratio decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level. |
Working Capital Turnover
Microsoft Corp., working capital turnover calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | 184,257) | 169,684) | 184,406) | 181,915) | 175,552) | 169,662) | |
| Less: Current liabilities | 104,149) | 95,082) | 88,657) | 72,310) | 69,420) | 58,488) | |
| Working capital | 80,108) | 74,602) | 95,749) | 109,605) | 106,132) | 111,174) | |
| Revenue | 211,915) | 198,270) | 168,088) | 143,015) | 125,843) | 110,360) | |
| Short-term Activity Ratio | |||||||
| Working capital turnover1 | 2.65 | 2.66 | 1.76 | 1.30 | 1.19 | 0.99 | |
| Benchmarks | |||||||
| Working Capital Turnover, Competitors2 | |||||||
| Accenture PLC | 11.93 | 15.07 | 12.77 | 8.71 | 9.85 | 12.12 | |
| Adobe Inc. | 6.85 | 20.28 | 9.09 | 4.89 | — | 16.24 | |
| International Business Machines Corp. | — | — | — | — | 107.30 | — | |
| Intuit Inc. | 8.13 | 8.98 | 3.85 | 1.73 | 4.17 | 20.71 | |
| Oracle Corp. | — | 3.50 | 1.29 | 1.12 | 1.42 | 0.70 | |
| Palo Alto Networks Inc. | — | — | — | 1.40 | 1.80 | 1.14 | |
| Salesforce Inc. | 62.21 | 24.95 | 5.11 | 15.29 | — | — | |
| ServiceNow Inc. | 21.77 | 11.16 | 21.76 | 5.76 | 46.69 | — | |
| Synopsys Inc. | 13.12 | 21.34 | 10.65 | 9.00 | — | — | |
| Working Capital Turnover, Sector | |||||||
| Software & Services | 5.49 | 4.82 | 2.78 | 2.17 | 2.33 | — | |
| Working Capital Turnover, Industry | |||||||
| Information Technology | 5.23 | 5.68 | 3.87 | 2.86 | 3.06 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Working capital turnover = Revenue ÷ Working capital
= 211,915 ÷ 80,108 = 2.65
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Microsoft Corp. working capital turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023. |
Average Inventory Processing Period
Microsoft Corp., average inventory processing period calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Inventory turnover | 26.35 | 16.74 | 19.81 | 24.32 | 20.80 | 14.41 | |
| Short-term Activity Ratio (no. days) | |||||||
| Average inventory processing period1 | 14 | 22 | 18 | 15 | 18 | 25 | |
| Benchmarks (no. days) | |||||||
| Average Inventory Processing Period, Competitors2 | |||||||
| International Business Machines Corp. | 15 | 20 | 23 | 18 | 15 | — | |
| Oracle Corp. | 8 | 13 | 7 | 10 | 15 | 18 | |
| Synopsys Inc. | 97 | 73 | 97 | 88 | 69 | 61 | |
| Average Inventory Processing Period, Sector | |||||||
| Software & Services | 9 | 14 | 13 | 11 | 12 | — | |
| Average Inventory Processing Period, Industry | |||||||
| Information Technology | 50 | 45 | 38 | 35 | 35 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 26.35 = 14
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Microsoft Corp. number of days of inventory outstanding deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level. |
Average Receivable Collection Period
Microsoft Corp., average receivable collection period calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Receivables turnover | 4.35 | 4.48 | 4.42 | 4.47 | 4.26 | 4.17 | |
| Short-term Activity Ratio (no. days) | |||||||
| Average receivable collection period1 | 84 | 81 | 83 | 82 | 86 | 88 | |
| Benchmarks (no. days) | |||||||
| Average Receivable Collection Period, Competitors2 | |||||||
| Accenture PLC | 61 | 62 | 64 | 59 | 63 | 44 | |
| Adobe Inc. | 42 | 43 | 43 | 40 | 50 | 53 | |
| International Business Machines Corp. | 43 | 39 | 43 | 35 | 37 | — | |
| Intuit Inc. | 10 | 13 | 15 | 7 | 5 | 6 | |
| Oracle Corp. | 51 | 51 | 49 | 52 | 47 | 48 | |
| Palo Alto Networks Inc. | 130 | 142 | 106 | 111 | 73 | 75 | |
| Salesforce Inc. | 125 | 134 | 134 | 132 | 135 | — | |
| ServiceNow Inc. | 83 | 87 | 86 | 82 | 88 | — | |
| Synopsys Inc. | 59 | 57 | 49 | 77 | 60 | 65 | |
| Average Receivable Collection Period, Sector | |||||||
| Software & Services | 71 | 70 | 70 | 65 | 65 | — | |
| Average Receivable Collection Period, Industry | |||||||
| Information Technology | 49 | 49 | 48 | 46 | 48 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 4.35 = 84
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Microsoft Corp. number of days of receivables outstanding improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
Operating Cycle
Microsoft Corp., operating cycle calculation, comparison to benchmarks
No. days
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Average inventory processing period | 14 | 22 | 18 | 15 | 18 | 25 | |
| Average receivable collection period | 84 | 81 | 83 | 82 | 86 | 88 | |
| Short-term Activity Ratio | |||||||
| Operating cycle1 | 98 | 103 | 101 | 97 | 104 | 113 | |
| Benchmarks | |||||||
| Operating Cycle, Competitors2 | |||||||
| International Business Machines Corp. | 58 | 59 | 66 | 53 | 52 | — | |
| Oracle Corp. | 59 | 64 | 56 | 62 | 62 | 66 | |
| Synopsys Inc. | 156 | 130 | 146 | 165 | 129 | 126 | |
| Operating Cycle, Sector | |||||||
| Software & Services | 80 | 84 | 83 | 76 | 77 | — | |
| Operating Cycle, Industry | |||||||
| Information Technology | 99 | 94 | 86 | 81 | 83 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 14 + 84 = 98
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Microsoft Corp. operating cycle deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level. |
Average Payables Payment Period
Microsoft Corp., average payables payment period calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Payables turnover | 3.64 | 3.30 | 3.44 | 3.68 | 4.57 | 4.45 | |
| Short-term Activity Ratio (no. days) | |||||||
| Average payables payment period1 | 100 | 111 | 106 | 99 | 80 | 82 | |
| Benchmarks (no. days) | |||||||
| Average Payables Payment Period, Competitors2 | |||||||
| Accenture PLC | 21 | 22 | 24 | 16 | 20 | 17 | |
| Adobe Inc. | 49 | 64 | 61 | 65 | 46 | 57 | |
| International Business Machines Corp. | 55 | 53 | 56 | 47 | 44 | — | |
| Intuit Inc. | 74 | 112 | 135 | 81 | 86 | 66 | |
| Oracle Corp. | 32 | 54 | 35 | 29 | 26 | 24 | |
| Palo Alto Networks Inc. | 25 | 27 | 16 | 23 | 33 | 28 | |
| Salesforce Inc. | — | — | — | — | — | — | |
| ServiceNow Inc. | 24 | 64 | 24 | 13 | 24 | — | |
| Synopsys Inc. | 47 | 13 | 12 | 14 | 10 | 42 | |
| Average Payables Payment Period, Sector | |||||||
| Software & Services | 59 | 66 | 64 | 56 | 48 | — | |
| Average Payables Payment Period, Industry | |||||||
| Information Technology | 75 | 81 | 73 | 68 | 69 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 3.64 = 100
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Microsoft Corp. number of days of payables outstanding increased from 2021 to 2022 but then decreased significantly from 2022 to 2023. |
Cash Conversion Cycle
Microsoft Corp., cash conversion cycle calculation, comparison to benchmarks
No. days
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Average inventory processing period | 14 | 22 | 18 | 15 | 18 | 25 | |
| Average receivable collection period | 84 | 81 | 83 | 82 | 86 | 88 | |
| Average payables payment period | 100 | 111 | 106 | 99 | 80 | 82 | |
| Short-term Activity Ratio | |||||||
| Cash conversion cycle1 | -2 | -8 | -5 | -2 | 24 | 31 | |
| Benchmarks | |||||||
| Cash Conversion Cycle, Competitors2 | |||||||
| International Business Machines Corp. | 3 | 6 | 10 | 6 | 8 | — | |
| Oracle Corp. | 27 | 10 | 21 | 33 | 36 | 42 | |
| Synopsys Inc. | 109 | 117 | 134 | 151 | 119 | 84 | |
| Cash Conversion Cycle, Sector | |||||||
| Software & Services | 21 | 18 | 19 | 20 | 29 | — | |
| Cash Conversion Cycle, Industry | |||||||
| Information Technology | 24 | 13 | 13 | 13 | 14 | — | |
Based on: 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), 10-K (reporting date: 2018-06-30).
1 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 14 + 84 – 100 = -2
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Microsoft Corp. cash conversion cycle improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |