Microsoft Corporation (MSFT)

Fixed asset turnover

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Revenue (ttm)	US$ in thousands	281,724,000	270,010,000	261,802,000	254,190,000	245,122,000	236,584,000	227,583,000	218,310,000	211,915,000	207,591,000	204,094,000	203,075,000	198,270,000	192,557,000	184,903,000	176,251,000	168,088,000	159,969,000	153,284,000	147,114,000
Property, plant and equipment	US$ in thousands	229,789,000	208,414,000	189,718,000	173,391,000	—	—	—	117,937,000	109,987,000	88,132,000	82,755,000	77,037,000	87,546,000	70,298,000	67,214,000	75,347,000	70,803,000	54,945,000	51,737,000	47,927,000
Fixed asset turnover		1.23	1.30	1.38	1.47	—	—	—	1.85	1.93	2.36	2.47	2.64	2.26	2.74	2.75	2.34	2.37	2.91	2.96	3.07

June 30, 2025 calculation

Fixed asset turnover = Revenue (ttm) ÷ Property, plant and equipment
= $281,724,000K ÷ $229,789,000K
= 1.23

The fixed asset turnover ratio for Microsoft Corporation has demonstrated a fluctuating trend over the analyzed periods, reflecting ongoing changes in the company's utilization efficiency of its tangible fixed assets. Starting from a high of 3.07 as of September 30, 2020, the ratio experienced a decline through subsequent periods, reaching a low of approximately 1.23 by June 30, 2025.

This downward trend indicates a reduction in the company's ability to generate revenues from its fixed assets over time. Notably, the ratio peaked at 3.07 in late 2020 and steadily decreased with intermittent fluctuations, with a significant decline observed after the March 2022 period. The ratio stabilized somewhat during late 2022 and early 2023, but continued to trend downward thereafter.

The declining ratio suggests that Microsoft’s fixed assets are generating less revenue per dollar invested in property, plant, and equipment. This could be indicative of several operational factors, such as increased capital expenditures not immediately translating into proportional revenue growth, changes in asset utilization efficiency, shifts in the company’s business model, or a strategic move towards less asset-intensive activities.

Overall, the persistent decrease in the fixed asset turnover ratio over the recent periods points to a potential need for management to reassess asset utilization strategies to improve the efficiency of fixed asset deployment, especially if the trend persists relative to the company's revenue growth patterns.