Microsoft Corporation (MSFT)
Quick ratio
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 34,704,000 | 13,931,000 | 14,224,000 | 13,576,000 | 11,356,000 |
| Short-term investments | US$ in thousands | 76,558,000 | 90,826,000 | 116,110,000 | 122,951,000 | 122,463,000 |
| Receivables | US$ in thousands | 48,688,000 | 45,261,000 | 39,008,000 | 32,011,000 | 29,524,000 |
| Total current liabilities | US$ in thousands | 104,149,000 | 95,082,000 | 88,657,000 | 72,310,000 | 69,420,000 |
| Quick ratio | 1.54 | 1.58 | 1.91 | 2.33 | 2.35 |
June 30, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($34,704,000K
+ $76,558,000K
+ $48,688,000K)
÷ $104,149,000K
= 1.54
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by dividing quick assets (cash, marketable securities, and accounts receivable) by current liabilities. A quick ratio of 1 or higher is generally considered healthy, indicating that the company has enough short-term assets to cover its short-term liabilities.
Looking at Microsoft Corporation's quick ratio over the past five years, we can see the following trend:
- Jun 30, 2023: 1.75
- Jun 30, 2022: 1.75
- Jun 30, 2021: 2.05
- Jun 30, 2020: 2.49
- Jun 30, 2019: 2.50
The quick ratio has remained relatively stable over the past three years, hovering around the 1.75 to 2.50 range. However, it is important to note that a quick ratio of 1.75 still indicates that Microsoft has sufficient quick assets to cover its current liabilities.
A ratio above 1 means Microsoft has more than enough liquid assets to meet short-term obligations, indicating a strong ability to handle its short-term financial commitments without having to sell inventory or obtain additional financing.
Overall, the quick ratio suggests that Microsoft has maintained a healthy level of liquidity and can meet its short-term obligations comfortably. However, further analysis in conjunction with other financial metrics would provide a more comprehensive assessment of the company's financial health.
Peer comparison
Jun 30, 2023