Microsoft Corporation (MSFT)

Working capital turnover

		Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Revenue	US$ in thousands	209,747,000	196,109,000	165,936,000	140,503,000	123,495,000
Total current assets	US$ in thousands	184,257,000	169,684,000	184,406,000	181,915,000	175,552,000
Total current liabilities	US$ in thousands	104,149,000	95,082,000	88,657,000	72,310,000	69,420,000
Working capital turnover		2.62	2.63	1.73	1.28	1.16

June 30, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $209,747,000K ÷ ($184,257,000K – $104,149,000K)
= 2.62

The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. A higher ratio indicates better efficiency in utilizing working capital.

Looking at Microsoft Corporation's working capital turnover ratio over the past five years, we can observe a consistent improvement. In June 2023, the ratio stood at 2.65, slightly lower than the 2.66 reported in June 2022. This slight decrease may indicate a slightly less efficient utilization of working capital to generate sales compared to the previous year.

However, a closer comparison to earlier years reveals a significant improvement. In June 2021, the ratio was 1.76, demonstrating a notable increase from 1.30 in June 2020 and 1.19 in June 2019. This consistent upward trend suggests that Microsoft has been effectively leveraging its working capital to drive sales growth and generate revenue.

Overall, the upward trend in Microsoft's working capital turnover ratio reflects an improvement in the company's efficiency in utilizing its working capital, which is a positive indicator of its operational performance and financial management. This trend suggests that Microsoft has been managing its working capital more effectively to support its business operations and drive revenue generation.