Microsoft Corporation (MSFT)

Cash ratio

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Cash and cash equivalents	US$ in thousands	30,242,000	18,315,000	34,704,000	13,931,000	14,224,000
Short-term investments	US$ in thousands	64,323,000	57,216,000	76,558,000	90,826,000	116,110,000
Total current liabilities	US$ in thousands	141,218,000	125,286,000	104,149,000	95,082,000	88,657,000
Cash ratio		0.67	0.60	1.07	1.10	1.47

June 30, 2025 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($30,242,000K + $64,323,000K) ÷ $141,218,000K
= 0.67

The cash ratio of Microsoft Corporation has exhibited a declining trend over the analyzed period from June 30, 2021, through June 30, 2025. Specifically, the ratio was 1.47 on June 30, 2021, indicating that Microsoft held approximately 1.47 dollars in cash and cash equivalents for every dollar of current liabilities, reflecting a strong liquidity position. By June 30, 2022, the ratio decreased to 1.10, suggesting a slight reduction in the company's ability to meet short-term obligations solely through cash and cash equivalents. This downward trend continued into June 30, 2023, with the ratio further diminishing to 1.07, which indicates a continued but moderate decline in immediate liquidity.

The decline became more pronounced by June 30, 2024, with the cash ratio dropping to 0.60. This suggests that Microsoft’s cash holdings, relative to its current liabilities, have decreased to less than one dollar for each dollar of obligations, potentially reflecting a strategic shift towards other liquid assets or investments, or an increase in short-term liabilities. The ratio saw a slight upward movement to 0.67 by June 30, 2025, but remained well below the initial levels observed in 2021.

Overall, the decreasing cash ratio over this period implies a reduction in Microsoft’s reliance solely on cash and cash equivalents for covering its short-term liabilities. This trend may be attributed to strategic financial management, changes in working capital, or an increased use of other liquid assets such as marketable securities. The ratio's movement reflects a shift towards a broader liquidity framework rather than an immediate short-term liquidity concern, but it warrants attention to ensure that liquidity remains sufficient relative to upcoming liabilities.