Microsoft Corporation (MSFT)

Current ratio

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Total current assets	US$ in thousands	191,131,000	159,734,000	184,257,000	169,684,000	184,406,000
Total current liabilities	US$ in thousands	141,218,000	125,286,000	104,149,000	95,082,000	88,657,000
Current ratio		1.35	1.27	1.77	1.78	2.08

June 30, 2025 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $191,131,000K ÷ $141,218,000K
= 1.35

The analysis of Microsoft Corporation's current ratio over the specified periods reveals a trend of gradual deterioration in liquidity position.

On June 30, 2021, the current ratio stood at 2.08, indicating that current assets were more than twice the current liabilities, reflecting a robust liquidity position. By June 30, 2022, this ratio declined to 1.78, suggesting a slight reduction in the company's ability to meet short-term obligations with its current assets. The downward trend continued into June 30, 2023, with the current ratio marginally decreasing to 1.77, maintaining a relatively stable liquidity level compared to the previous year.

Further deterioration is observed in the subsequent period, with the ratio dropping significantly to 1.27 as of June 30, 2024. This decline indicates a decreased margin of safety in covering current liabilities with current assets, although the company still maintains a liquidity buffer above 1, signifying that current assets exceed current liabilities. The ratio then exhibits a slight upward movement to 1.35 by June 30, 2025, suggesting a modest improvement in liquidity but still well below the peak levels observed in 2021.

Overall, the trend indicates that Microsoft has experienced a consistent decline in its current ratio over the four-year span, reducing from a strong liquidity position to a more moderate level. While the ratio remains above 1, implying that current assets continue to cover current liabilities, the decrease warrants monitoring to ensure that liquidity remains adequate to support operational needs and short-term obligations.