Microsoft Corporation (MSFT)

Inventory turnover

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Cost of revenue	US$ in thousands	87,831,000	74,114,000	65,863,000	62,650,000	52,232,000
Inventory	US$ in thousands	938,000	1,246,000	2,500,000	3,742,000	2,636,000
Inventory turnover		93.64	59.48	26.35	16.74	19.81

June 30, 2025 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $87,831,000K ÷ $938,000K
= 93.64

The inventory turnover ratios of Microsoft Corporation over the analyzed period demonstrate notable fluctuations, reflecting changes in inventory management efficiency and operational dynamics. As of June 30, 2021, the inventory turnover stood at 19.81, indicating that the company's inventory was sold and replaced approximately 20 times during that fiscal year. By June 30, 2022, this figure declined to 16.74, suggesting a modest decrease in inventory turnover efficiency, potentially attributable to increased inventory levels, slower sales, or strategic inventory accumulation.

In the following year, the ratio experienced a significant increase, reaching 26.35 as of June 30, 2023. This uptick indicates an improvement in the company's inventory management, with faster sales cycles and more efficient inventory utilization. The upward trend becomes more pronounced in subsequent years, with the ratio jumping to 59.48 as of June 30, 2024. Such a substantial increase suggests a highly efficient inventory turnover, likely driven by streamlined supply chain processes, product demand surges, or strategic inventory reductions.

Looking ahead, the ratio further escalates to 93.64 as of June 30, 2025, marking an exceptionally high inventory turnover. This level of turnover implies that Microsoft is operating with very lean inventory levels relative to sales, potentially enhancing cash flow and reducing storage costs, but also raising considerations regarding inventory availability and supply chain resilience.

Overall, the progression from 19.81 in 2021 to 93.64 in 2025 illustrates a trajectory toward markedly improved inventory management efficiency. The dramatic increases in the ratio in recent years reflect a strategic shift or operational enhancements that enable the company to cycle through inventory at an accelerated pace. Such a pattern underscores a focus on inventory optimization, aligning inventory levels more closely with sales demand, which can be advantageous for profitability but warrants careful management to avoid inventory shortages.