Microsoft Corporation (MSFT)

Cash ratio

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Cash and cash equivalents	US$ in thousands	18,315,000	34,704,000	13,931,000	14,224,000	13,576,000
Short-term investments	US$ in thousands	57,216,000	76,558,000	90,826,000	116,110,000	122,951,000
Total current liabilities	US$ in thousands	125,286,000	104,149,000	95,082,000	88,657,000	72,310,000
Cash ratio		0.60	1.07	1.10	1.47	1.89

June 30, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($18,315,000K + $57,216,000K) ÷ $125,286,000K
= 0.60

The cash ratio of Microsoft Corporation has shown a decreasing trend over the past five years. As of June 30, 2020, the cash ratio was at a robust level of 1.89, indicating the company had $1.89 in cash and cash equivalents for every dollar of current liabilities. However, by June 30, 2024, the cash ratio had decreased to 0.60, signaling a reduction in liquidity.

A cash ratio above 1.0 is generally considered healthy, as it suggests the company has enough liquid assets to cover its short-term liabilities. Despite the downward trend, Microsoft's cash ratio remained above 1.0 throughout the period, indicating a strong ability to meet its immediate financial obligations. However, the decreasing trend may warrant further investigation into the company's cash management practices and liquidity position.