Microsoft Corporation (MSFT)

The current ratio of Microsoft Corporation has decreased from 2.52 in June 2020 to 1.27 in June 2024. This indicates a declining trend in the company's ability to meet its short-term obligations with its current assets. Similarly, the quick ratio has also decreased from 1.89 in June 2020 to 0.60 in June 2024, implying that Microsoft's ability to meet its immediate liabilities without relying on inventory has weakened over the years. The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also followed a downward trend, dropping from 1.89 in June 2020 to 0.60 in June 2024. This decline suggests that Microsoft may face challenges in meeting its short-term obligations solely with its readily available cash resources.

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See also:

Microsoft Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Microsoft Corporation has exhibited fluctuating trends over the past five years based on the data provided. In June 2020, the company's cash conversion cycle stood at 15.01 days, indicating the average time it takes for Microsoft to convert its investments in inventory and other resources into cash. Subsequently, there was an increase in the cash conversion cycle to 18.42 days in June 2021 and a further rise to 21.80 days in June 2022, suggesting a lengthening of the cycle.

However, the trend reversed in June 2023, with the cash conversion cycle decreasing to 13.85 days, indicating an improvement in efficiency in converting investments into cash. This favorable trend continued in June 2024, where the cycle reduced significantly to 6.14 days, reflecting a more efficient management of inventory and other working capital components.

Overall, the analysis of Microsoft's cash conversion cycle highlights the company's ability to effectively manage its working capital and optimize cash flows over the years, with a notable improvement in efficiency observed in the most recent periods.