Microsoft financial ratio analysis. Financial analysis 2022-10-20

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Microsoft is a multinational technology company that develops and sells a range of products and services, including operating systems, personal computers, server software, and video game consoles. As one of the largest and most successful technology companies in the world, Microsoft is widely followed by investors and analysts, and its financial performance is closely scrutinized.

One tool that investors and analysts use to evaluate the financial performance of a company is financial ratio analysis. This involves calculating and comparing various ratios, such as profitability ratios, liquidity ratios, and debt ratios, to understand the company's financial health and identify trends in its performance over time.

One of the key profitability ratios for Microsoft is the net margin, which measures the company's profitability as a percentage of its revenue. In recent years, Microsoft has consistently had a high net margin, averaging around 20% over the past decade. This indicates that the company is able to generate significant profits from its operations and is able to effectively manage its costs.

Another important profitability ratio for Microsoft is the return on equity (ROE), which measures the company's ability to generate profits from its shareholder equity. Microsoft has consistently had a high ROE, averaging around 40% over the past decade. This indicates that the company is able to effectively use its shareholder equity to generate profits and create value for its shareholders.

In terms of liquidity, Microsoft has strong ratios, such as the current ratio and the quick ratio. The current ratio measures the company's ability to meet its short-term financial obligations, and Microsoft has consistently had a current ratio above 1.5, indicating that it has sufficient assets to cover its short-term liabilities. The quick ratio, which is similar to the current ratio but excludes inventory from the assets side, is also strong for Microsoft, indicating that the company has a high level of liquid assets that can be quickly converted to cash.

Finally, Microsoft has a relatively low level of debt compared to its equity. The company's debt-to-equity ratio is around 0.5, which indicates that it has a conservative financial structure and is not heavily reliant on debt to finance its operations.

In summary, financial ratio analysis of Microsoft reveals a financially strong and well-managed company. Its high profitability ratios and strong liquidity indicate that it is able to generate strong profits and effectively manage its financial resources. Its low level of debt also suggests a conservative financial approach, which may be attractive to investors looking for stability and risk management.

Microsoft Corp. (NASDAQ:MSFT)

microsoft financial ratio analysis

We have not received a proposed assessment for the unresolved key transfer pricing issues and do not expect a final resolution of these issues in the next 12 months. On March 9, 2021, we completed our acquisition of ZeniMax Media Inc. Level 3 investments are valued using internally-developed models with unobservable inputs. We disclose metrics to enable investors to evaluate progress against our ambitions, provide transparency into performance trends, and reflect the continued evolution of our products and services. The surplus for Microsoft could be balanced by increasing assets. Certain of our employees are subject to collective bargaining agreements. A large network of partner advisors support many of these sales.


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Financial analysis

microsoft financial ratio analysis

Open Open agreements are a simple, cost-effective way to acquire the latest Microsoft technology. The largest category of OEMs are direct OEMs as our relationship with them is managed through a direct agreement between Microsoft and the OEM. This large jump is partially caused by a depreciation change that decreased 2021 expenses. Xbox enables people to connect and share online gaming experiences that are accessible on Xbox consoles, Windows-enabled devices, and other devices. Our other current financial assets and current financial liabilities have fair values that approximate their carrying values. Through our Finally, we continue to Commit to a sustainable future While the pandemic has been the defining issue of the past year-and-a-half, climate change is the challenge of our lifetime.

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A Financial Analysis of Microsoft and Apple (2018

microsoft financial ratio analysis

Savings Plan We have savings plans in the U. Securities and Exchange Commission. Finally, Learning Solutions, including Glint, help businesses close critical skills gaps in times where companies are having to do more with existing talent. However, as % of total assets, it was decreasing. .

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Financial performance childhealthpolicy.vumc.org solution

microsoft financial ratio analysis

When these account types are used, reporting through Power BI will reverse the signs and show the amounts as positive. We offer an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and we provide solution support and consulting services. Contract Balances and Other Receivables Timing of revenue recognition may differ from the timing of invoicing to customers. INCOME TAXES Effective Tax Rate Our effective tax rate for fiscal years 2021 and 2020 was 14% and 17%, respectively. Marketing Solutions help companies reach, engage, and convert their audiences at scale. We conducted our audits in accordance with the standards of the PCAOB. However, when you go to the next level in the hierarchy, the report no longer shows the parent in the hierarchy, as shown in the following illustration.

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Microsoft financials 2022

microsoft financial ratio analysis

Archives of these events are also available. The strong success of LinkedIn is a clear indicator of how important this is. Assets Recognized from Costs to Obtain a Contract with a Customer We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. The financial results of GitHub have been included in our consolidated financial statements since the date of the acquisition. All share repurchases were made using cash resources.

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Microsoft Financial Strength Comparisons to Industry Sector and S&P

microsoft financial ratio analysis

Therefore it distorted its growth both in 2021 and 2022. RECENT ACCOUNTING GUIDANCE Refer to Note 1 — Accounting Policies of the Notes to Financial Statements for further discussion. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We monitor pay equity and career progress across multiple dimensions. The goal of the new financial statements is to enable filtering on dimensions that aren't set up as financial dimensions.

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Microsoft Historical Financial Ratios Analysis

microsoft financial ratio analysis

ROA A profitability ratio calculated as net income divided by total assets. As of June 30, 2021, an aggregate of 251 million shares were authorized for future grant under our stock plans. Revenue and expenses are translated at average rates of exchange prevailing during the year. We believe that our audit provides a reasonable basis for our opinion. We design our devices, from Surface to Xbox, to minimize their impact on the environment. From our CEO and Senior Leadership Team and throughout our organization, people at Microsoft are working to conduct our business in principled ways that make a significant positive impact on important global issues.

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Microsoft’s Financial Statements: Overview & Analysis 2022

microsoft financial ratio analysis

In June 2020, with tens of millions of people displaced from their jobs due to the pandemic, we brought resources together from across Microsoft, inclusive of LinkedIn and GitHub, to help To build a more inclusive economy, we also have a responsibility to help close the Disability Divide, which impacts more than 1 billion people with disabilities around the world. A hearing on general causation is scheduled for January and February of 2022. You can select additional posting layers in the filter to show the aggregated amounts. The decrease from the federal statutory rate in fiscal year 2021 is primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland and Puerto Rico, tax benefits relating to stock-based compensation, and tax benefits from the India Supreme Court decision on withholding taxes. Commercial cloud gross margin percentage increased 4 points to 71% driven by gross margin percentage improvement in Azure and the change in estimated useful lives of our server and network equipment, offset in part by sales mix shift to Azure. Therefore, to take advantage of new features and changes to the data model in the next release, you will have to redo any changes that you made to the default reports through Microsoft Power BI Desktop.

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