Microsoft Corporation (MSFT)
Profitability ratios
Return on sales
| Dec 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross profit margin | 69.78% | 70.48% | 70.83% | 70.57% | 70.14% | 69.64% | 69.15% | 68.93% | 68.96% | 69.16% | 69.55% | 69.68% | 69.77% | 69.82% | 69.07% | 69.10% | 69.08% | 68.70% | 69.12% | 68.63% |
| Operating profit margin | 45.52% | 46.06% | 45.30% | 44.69% | 43.45% | 42.21% | 41.27% | 41.04% | 42.12% | 42.52% | 43.06% | 43.05% | 42.70% | 42.13% | 40.55% | 39.67% | 38.62% | 37.53% | 37.99% | 37.24% |
| Pretax margin | 43.99% | 45.55% | 45.09% | 44.99% | 43.97% | 42.58% | 41.40% | 40.92% | 42.17% | 42.69% | 43.42% | 43.63% | 43.40% | 42.85% | 41.12% | 40.05% | 38.84% | 37.59% | 38.17% | 37.64% |
| Net profit margin | 36.08% | 37.31% | 36.92% | 36.69% | 35.67% | 34.50% | 33.59% | 33.42% | 34.72% | 37.09% | 38.08% | 38.98% | 39.02% | 36.92% | 35.37% | 33.84% | 32.67% | 31.38% | 33.82% | 33.46% |
The profitability ratios of Microsoft Corporation indicate the company's ability to generate earnings relative to its revenue.
1. Gross Profit Margin: Microsoft consistently maintained a high gross profit margin ranging from 68.63% to 70.57% over the period from December 31, 2019, to December 31, 2024. The highest gross profit margin was recorded on December 31, 2023, at 70.57%. This shows that Microsoft effectively manages its production costs and pricing strategies.
2. Operating Profit Margin: The operating profit margin of Microsoft improved steadily from 37.24% on December 31, 2019, to 45.52% on December 31, 2024. The margin shows the company's operational efficiency in generating profits from its core business activities. The highest operating profit margin was achieved on December 31, 2024, at 45.52%.
3. Pretax Margin: Microsoft's pretax margin also displayed a positive trend, increasing from 37.64% on December 31, 2019, to 43.99% on December 31, 2024. This indicates the company's ability to control expenses and generate income before taxes relative to its revenue. The highest pretax margin was recorded on December 31, 2024, at 43.99%.
4. Net Profit Margin: The net profit margin of Microsoft fluctuated slightly but generally remained healthy, ranging from 31.38% to 39.02% over the period from June 30, 2020, to September 30, 2021. The highest net profit margin was achieved on September 30, 2021, at 39.02%. This ratio reflects Microsoft's ability to control costs, manage taxes, and ultimately generate profits for shareholders after all expenses.
In conclusion, Microsoft's profitability ratios demonstrate the company's strong financial performance, efficient cost management, and sustained profitability over the analyzed period.
Return on investment
| Dec 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 21.88% | 21.43% | 21.84% | 21.36% | 21.06% | 21.49% | 22.31% | 22.72% | 23.53% | 22.85% | 23.78% | 23.10% | 22.14% | 20.95% | 20.79% | 19.78% | 18.65% | 17.58% | 18.20% | 17.44% |
| Return on assets (ROA) | 17.34% | 17.35% | 17.80% | 17.54% | 17.29% | 17.56% | 18.16% | 18.50% | 19.40% | 19.94% | 21.03% | 20.91% | 20.24% | 18.36% | 18.13% | 16.87% | 15.78% | 14.70% | 16.21% | 15.67% |
| Return on total capital | 34.22% | 34.28% | 36.50% | 36.59% | 36.94% | 36.77% | 36.79% | 37.22% | 39.64% | 40.16% | 40.15% | 39.34% | 38.51% | 38.24% | 36.64% | 34.09% | 32.71% | 31.27% | 30.89% | 30.26% |
| Return on equity (ROE) | 30.59% | 31.55% | 34.04% | 34.64% | 34.93% | 35.09% | 35.45% | 36.83% | 40.21% | 43.68% | 44.47% | 44.49% | 44.67% | 43.15% | 41.65% | 39.40% | 38.49% | 37.43% | 40.41% | 40.25% |
Based on the provided data on Microsoft Corporation's profitability ratios, we can observe the following trends:
1. Operating Return on Assets (Operating ROA):
- The Operating ROA has shown a steady increase from 17.44% as of December 31, 2019, to a peak of 23.78% as of March 31, 2022. Subsequently, it slightly declined to 21.88% as of December 31, 2024.
- This ratio indicates that Microsoft has been generating more operating profit per dollar of assets over the period analyzed, with some fluctuation in the later periods.
2. Return on Assets (ROA):
- The ROA also exhibited an upward trend, starting at 15.67% on December 31, 2019, and reaching a peak of 21.03% on March 31, 2022, before declining to 17.34% on December 31, 2024.
- ROA reflects Microsoft's overall profitability in generating earnings from its total assets, and the company maintained a strong performance in utilizing its assets efficiently.
3. Return on Total Capital:
- The Return on Total Capital showed a consistent increase from 30.26% on December 31, 2019, to a high of 40.16% on June 30, 2022. However, there was a subsequent decline to 34.22% on December 31, 2024.
- This ratio indicates Microsoft's ability to generate returns from both equity and debt capital, showcasing a profitable utilization of the company's total capital base.
4. Return on Equity (ROE):
- The ROE followed a similar uptrend, starting at 40.25% on December 31, 2019, peaking at 44.67% on September 30, 2021, and then gradually declining to 30.59% on December 31, 2024.
- ROE highlights Microsoft's ability to generate profits for its shareholders from the equity invested in the company, though there was a decrease in the later periods.
Overall, Microsoft Corporation demonstrated strong profitability metrics over the analyzed period, with fluctuations in the ratios reflecting varying levels of efficiency in generating profits from assets, capital, and equity. It is essential for investors and stakeholders to monitor these ratios to assess the company's financial performance and sustainability.