Microsoft Corporation (MSFT)
Profitability ratios
Return on sales
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 68.82% | 69.76% | 68.92% | 68.40% | 68.93% |
| Operating profit margin | 45.62% | 44.64% | 41.77% | 42.06% | 41.59% |
| Pretax margin | 43.88% | 43.97% | 42.14% | 42.22% | 42.30% |
| Net profit margin | 36.15% | 35.96% | 34.15% | 36.69% | 36.45% |
The profitability ratios of Microsoft Corporation over the period from June 30, 2021, to June 30, 2025, reflect an overall stable and improving profit profile, with some slight variations across the different metrics.
Gross profit margin demonstrates stability with marginal increases, beginning at 68.93% in 2021, dipping slightly to 68.40% in 2022, then rising to 68.92% in 2023. A notable increase occurs in 2024, reaching 69.76%, which indicates improved efficiency in managing cost of goods sold relative to revenue. By 2025, the gross margin is slightly lower at 68.82%, but remains close to historical levels, suggesting consistent control over production costs and pricing strategies.
Operating profit margin shows a gradual upward trend from 41.59% in 2021 to 45.62% projected in 2025. After a slight uptick from 41.59% in 2021 to 42.06% in 2022, it remains relatively stable before increasing more noticeably in 2024 and 2025. This trend indicates enhanced operational efficiency and effective cost management within the company's core operations.
Pre-tax profit margins mirror the stability observed in operating margins, with values fluctuating narrowly around 42% across the period. Starting at 42.30% in 2021, the margin slightly decreases to 42.14% in 2023 but rises again to 43.97% in 2024 and remains steady at 43.88% in 2025. These figures suggest consistent profitability before tax, reflecting favorable non-operational factors and effective tax planning.
The net profit margin, which accounts for all expenses, taxes, and other deductions, exhibits minor fluctuations. Beginning at 36.45% in 2021, it increases marginally to 36.69% in 2022, then drops to 34.15% in 2023, possibly due to increased expenses or tax factors during that year. The ratio improves again in 2024 to 35.96% and remains steady at 36.15% in 2025, indicating stable bottom-line profitability and effective management of all costs associated with operations.
Overall, Microsoft maintains robust profitability ratios with slight positive trends in gross and operating margins. The data suggests the company's ability to sustain profitability despite small fluctuations, supported by stable gross margins and improving operating and net margins in recent years. These indicators reflect effective cost control, operational efficiency, and a resilient profit structure.
Return on investment
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 20.76% | 21.37% | 21.49% | 22.85% | 20.95% |
| Return on assets (ROA) | 16.45% | 17.21% | 17.56% | 19.94% | 18.36% |
| Return on total capital | 36.69% | 41.24% | 44.26% | 51.51% | 51.73% |
| Return on equity (ROE) | 29.65% | 32.83% | 35.09% | 43.68% | 43.15% |
The analysis of Microsoft Corporation's profitability ratios over the period from June 30, 2021, to June 30, 2025, reveals a generally consistent but gradually declining trend in key metrics.
The Operating Return on Assets (Operating ROA) experienced an initial increase from 20.95% in 2021 to a peak of 22.85% in 2022. Subsequently, it declined slightly to 21.49% in 2023 and remained relatively stable with minor decreases to 21.37% in 2024 and 20.76% in 2025. This pattern suggests that while operating efficiency improved initially, it faced slight pressures in maintaining peak performance in later years.
The Return on Assets (ROA) demonstrated similar fluctuations, rising from 18.36% in 2021 to 19.94% in 2022, then decreasing to 17.56% in 2023 and gradually declining to 17.21% in 2024 and 16.45% in 2025. The downward trend indicates a modest reduction in overall asset profitability over the period.
Return on Total Capital showed a slight decline from 51.73% in 2021 to 51.51% in 2022, followed by a more pronounced decrease to 44.26% in 2023, then further diminishing to 41.24% in 2024 and 36.69% in 2025. This pattern suggests a reduction in the efficiency of capital employed in generating profits, potentially reflecting increased leverage or capital structure adjustments.
Return on Equity (ROE) exhibited a steady decrease from 43.15% in 2021 to 43.68% in 2022, and then a more significant decline to 35.09% in 2023. This downward trend continued through 2024 and 2025, reaching 32.83% and 29.65%, respectively. The decline in ROE indicates diminishing return to shareholders over the period, which could be influenced by increased equity base, reduced net income growth, or other profitability pressures.
Overall, the data indicates Microsoft's profitability ratios have been relatively high but have shown signs of gradual weakening across multiple dimensions, reflecting a potential shift in operating efficiency, asset utilization, and shareholder returns over the analyzed period.