Microsoft Corporation (MSFT)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Inventory turnover	59.48	26.35	16.74	19.81	24.32
Receivables turnover	—	—	—	—	—
Payables turnover	—	—	—	—	—
Working capital turnover	7.12	2.65	2.66	1.76	1.30

Activity ratios provide insights into how efficiently a company is managing its assets and operating its business. Let's analyze the activity ratios of Microsoft Corporation based on the provided data.

1. Inventory Turnover:
- Microsoft's inventory turnover has shown a fluctuating trend over the years, from 24.32 in 2020 to 59.48 in 2024. A higher inventory turnover ratio indicates that the company is efficiently selling its products and managing its inventory levels effectively. The significant increase in 2024 suggests that Microsoft is selling its products at a much faster rate.

2. Receivables Turnover:
- The data shows that receivables turnover information is not available (indicated by "—"). This could mean that receivables turnover was not applicable or not disclosed in the financial statements. Receivables turnover ratio reflects how quickly a company collects its outstanding accounts receivable.

3. Payables Turnover:
- Similar to receivables turnover, payables turnover information is not available, indicating that this information was not disclosed or not applicable. Payables turnover ratio signifies how efficiently a company pays its suppliers and vendors.

4. Working Capital Turnover:
- Microsoft's working capital turnover has been increasing steadily from 1.30 in 2020 to 7.12 in 2024. A higher working capital turnover ratio indicates that the company is utilizing its working capital more efficiently to generate revenue. The significant improvement in this ratio over the years indicates that Microsoft is effectively utilizing its working capital to support its operations and business growth.

In conclusion, while Microsoft has shown positive trends in inventory turnover and working capital turnover ratios, the lack of information on receivables and payables turnover limits a comprehensive analysis of the company's overall efficiency in managing its working capital and relationships with customers and suppliers.

Average number of days

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	6.14	13.85	21.80	18.42	15.01
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—

Based on the provided data for Microsoft Corporation's activity ratios:

1. Days of Inventory on Hand (DOH):
- Microsoft's DOH has been increasing over the years, from 15.01 days on June 30, 2020, to 6.14 days on June 30, 2024. This indicates that the company is able to manage its inventory more efficiently and convert it into sales at a faster rate in recent years.

2. Days of Sales Outstanding (DSO):
- The DSO data is not available for any of the years provided, suggesting that the company may not track this specific metric or it might not be relevant for Microsoft's business operations.

3. Number of Days of Payables:
- Similar to DSO, the data for the number of days of payables is not available for the years provided, which could imply that Microsoft does not disclose this information or it may not be a focus area for the company.

Overall, Microsoft's improving trend in inventory turnover, as indicated by the decreasing DOH, suggests enhanced efficiency in managing its inventory levels. The lack of data for DSO and payables days may indicate a lesser emphasis on these specific metrics or that they are not significant indicators for Microsoft's financial performance.

Long-term

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Fixed asset turnover	—	1.93	2.26	2.37	3.24
Total asset turnover	0.48	0.51	0.54	0.50	0.47

The Fixed Asset Turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. A decreasing trend in this ratio, as observed in Microsoft Corporation over the years from 2020 to 2024, indicates a decline in the company's ability to generate sales from its fixed assets. The ratio has decreased from 3.24 in 2020 to 1.93 in 2023, with no data provided for 2024. This suggests a potential underutilization or obsolescence of Microsoft's fixed assets.

On the other hand, the Total Asset Turnover ratio measures how effectively a company is using its total assets to generate revenue. Microsoft's Total Asset Turnover ratio has shown some fluctuations over the years, with a slight increase from 0.47 in 2020 to 0.54 in 2022 before decreasing to 0.48 in 2024. This indicates that, overall, Microsoft has been able to generate more revenue relative to its total assets in 2022 compared to 2020 and 2024.

In conclusion, while Microsoft's Fixed Asset Turnover ratio has shown a declining trend, suggesting potential inefficiencies in utilizing fixed assets, the Total Asset Turnover ratio indicates a mixed performance in effectively utilizing total assets to generate revenue over the years analyzed.