Microsoft Corporation (MSFT)

Activity ratios

Short-term

Turnover ratios

	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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	64.50	34.00	40.33	34.74	33.21	22.49	24.94	27.33	28.71	24.38	30.33	34.78	39.32	27.26	38.61	42.70	37.79	26.16	32.93	43.51
Receivables turnover	5.25	5.85	4.31	5.39	5.55	6.28	4.33	5.66	5.29	6.17	4.25	5.84	5.41	6.07	4.41	6.03	5.63	6.70	4.20	6.25
Payables turnover	5.89	5.28	5.57	6.53	6.44	5.78	4.91	5.60	5.66	5.61	5.27	5.82	5.92	5.89	5.84	7.59	7.82	8.00	7.24	11.25
Working capital turnover	8.53	2.61	2.62	2.63	2.65	2.74	2.63	2.49	1.89	1.85	1.73	1.70	1.42	1.36	1.29	1.22	1.23	1.19	1.17	1.14

The activity ratios of Microsoft Corporation provide insights into the efficiency of the company's management of its assets and working capital.

First, the inventory turnover ratio indicates that Microsoft is efficiently managing its inventory, with a significant increase from 15.10 in Sep 30, 2022 to 42.63 in Dec 31, 2023. This indicates that the company is selling through its inventory at a faster rate, which is generally a positive indication of efficient inventory management.

Second, the receivables turnover ratio, which measures how effectively the company is collecting on credit sales, has shown some fluctuations. However, the ratio has remained within a relatively stable range over the past eight quarters, indicating consistent performance in collecting receivables.

Third, the payables turnover ratio, which measures how quickly the company is paying its suppliers, has also demonstrated consistency over the quarters, with a slight decrease from 4.23 in Dec 31, 2022 to 3.89 in Dec 31, 2023. This suggests that Microsoft is managing its payables effectively.

Finally, the working capital turnover ratio, which measures how well the company is utilizing its working capital to generate sales, has shown an increase from 2.52 in Mar 31, 2022 to 8.63 in Dec 31, 2023. This indicates that Microsoft is efficiently using its working capital to generate revenue.

Overall, the activity ratios reflect a consistent and efficient management of assets and working capital by Microsoft Corporation, which is essential for its overall financial performance and profitability.

Average number of days

		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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	5.66	10.73	9.05	10.51	10.99	16.23	14.63	13.35	12.71	14.97	12.04	10.49	9.28	13.39	9.45	8.55	9.66	13.95	11.09	8.39
Days of sales outstanding (DSO)	days	69.50	62.41	84.73	67.74	65.80	58.14	84.24	64.47	68.97	59.18	85.80	62.52	67.45	60.13	82.81	60.57	64.82	54.46	86.82	58.37
Number of days of payables	days	62.00	69.08	65.51	55.89	56.63	63.15	74.30	65.17	64.49	65.11	69.23	62.70	61.61	61.92	62.51	48.08	46.68	45.63	50.41	32.44

Activity ratios provide insight into how efficiently a company is managing its assets and liabilities. In the case of Microsoft Corporation, we can analyze its activity ratios using the data provided.

Days of Inventory on Hand (DOH):
The trend of Microsoft's DOH indicates a decrease in the number of days inventory is held. It decreased from 24.17 days in September 2022 to 8.56 days in December 2023. This suggests that Microsoft has been able to manage its inventory more efficiently, potentially leading to lower holding costs and inventory obsolescence.

Days of Sales Outstanding (DSO):
The DSO measures the average number of days it takes for a company to collect its accounts receivable. Microsoft's DSO fluctuated during the analyzed periods, peaking at 83.86 days in June 2023 and then decreasing to 61.78 days in September 2023. The decrease in DSO generally indicates an improvement in the collection of receivables, potentially boosting cash flow.

Number of Days of Payables:
Microsoft's number of days of payables increased from 86.24 days in September 2022 to 93.81 days in December 2023. This suggests that the company has taken longer to pay its suppliers. While this may improve cash flow in the short term, it could strain relationships with suppliers if not managed carefully.

Overall, the decreasing trend in DOH and DSO, combined with the increase in the number of days of payables, may indicate an improvement in Microsoft's working capital management and potential enhancement of its liquidity position. However, it is important to monitor these ratios over time to assess the ongoing efficiency of the company's operations.

Long-term

	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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	2.00	2.11	2.19	2.33	2.44	2.61	2.64	2.71	2.72	2.73	2.78	2.88	2.93	3.03	3.20	3.32	3.27	3.33	3.40	3.58
Total asset turnover	0.48	0.48	0.51	0.54	0.55	0.56	0.54	0.55	0.54	0.52	0.50	0.51	0.50	0.48	0.47	0.48	0.47	0.46	0.43	0.46

The fixed asset turnover ratio for Microsoft Corporation has been fluctuating over the past eight quarters, ranging from 2.03 to 2.74. This ratio indicates that for every dollar invested in fixed assets, the company generates sales ranging from 2.03 to 2.74 dollars. The decrease in the fixed asset turnover ratio over the quarters may suggest that the company's fixed assets are not being utilized as efficiently to generate sales.

On the other hand, the total asset turnover ratio has also fluctuated, ranging from 0.48 to 0.56. This ratio reflects the company's ability to generate sales from its total assets. The fluctuations in this ratio indicate that the company's overall asset utilization has varied over the quarters.

Both ratios are important for evaluating a company's ability to generate sales from its assets. It is essential for Microsoft Corporation to closely monitor these ratios to ensure that its assets are being used efficiently to generate revenue.