Microsoft Corporation (MSFT)

Liquidity ratios

Sep 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Current ratio 1.30 1.24 1.22 1.66 1.77 1.91 1.93 1.84 1.78 1.99 2.25 2.16 2.08 2.29 2.58 2.53 2.52 2.90 2.80 2.85
Quick ratio 1.06 1.05 1.02 1.45 1.54 1.66 1.66 1.59 1.58 1.79 2.06 1.97 1.91 2.11 2.37 2.31 2.33 2.73 2.65 2.68
Cash ratio 0.68 0.68 0.67 1.15 1.07 1.22 1.22 1.23 1.10 1.35 1.62 1.62 1.47 1.74 1.96 1.97 1.89 2.34 2.25 2.35

The liquidity ratios of Microsoft Corporation show a trend of generally decreasing levels of liquidity over the analyzed period.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, declined from a high of 2.90 in September 2019 to 1.30 in September 2024. Despite some fluctuations, the current ratio has generally been above 1, indicating that Microsoft has had more than enough current assets to cover its short-term obligations.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventories from current assets, also exhibited a decreasing trend, falling from 2.73 in March 2020 to 1.06 in September 2024. This indicates that Microsoft may be becoming less able to cover its short-term liabilities without relying on inventory.

Lastly, the cash ratio, which measures the company's ability to pay off its current liabilities with its most liquid assets, demonstrated a similar downward trend from 2.35 in December 2019 to 0.68 in September 2024. This suggests that Microsoft's cash position relative to its current liabilities has weakened over time.

Overall, while the liquidity ratios of Microsoft Corporation have shown a declining trend, the company still maintains a healthy level of liquidity, as reflected in its ratios remaining above 1 and having a sufficient ability to meet its short-term obligations.

See also:

Microsoft Corporation Liquidity Ratios (Quarterly Data)

Additional liquidity measure

Sep 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Cash conversion cycle days -2.91 12.21 13.16 4.06 28.28 22.36 20.15 11.21 24.58 12.65 17.19 9.04 28.61 10.32 15.12 11.60 29.75 21.04 27.80 22.78

The cash conversion cycle of Microsoft Corporation has fluctuated over the reporting periods, indicating changes in the company's efficiency in managing its cash flow and working capital.

The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash receipts from customers. A shorter cash conversion cycle is generally favorable as it reflects efficient management of working capital.

Analyzing the trend in Microsoft's cash conversion cycle, we observe that:
- The cycle was negative in some periods, indicating that Microsoft was able to collect payments from customers before paying its suppliers and thus had a shorter cash conversion cycle.
- There are fluctuations in the cycle over the periods, suggesting varying efficiencies in managing working capital and cash flow.

Overall, a negative cash conversion cycle indicates effective management of cash flows and working capital, while a positive one suggests that the company takes longer to recover cash from its investments in inventory and receivables.

It is essential for Microsoft to continue monitoring and optimizing its cash conversion cycle to ensure efficient use of cash and working capital resources.