Microsoft Corporation (MSFT)
Profitability ratios
Return on sales
| Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross profit margin | 68.82% | 69.07% | 69.41% | 69.35% | 69.76% | 69.89% | 69.75% | 69.44% | 68.92% | 68.45% | 68.16% | 68.26% | 68.40% | 68.73% | 68.83% | 68.86% | 68.93% | 68.38% | 68.35% | 68.27% |
| Operating profit margin | 45.62% | 45.23% | 44.96% | 44.49% | 44.64% | 44.70% | 44.17% | 43.01% | 41.77% | 40.85% | 40.58% | 41.69% | 42.06% | 42.56% | 42.52% | 42.14% | 41.59% | 40.15% | 39.24% | 38.17% |
| Pretax margin | 43.88% | 43.80% | 43.40% | 43.58% | 43.97% | 44.49% | 44.47% | 43.53% | 42.14% | 40.98% | 40.47% | 41.74% | 42.22% | 42.91% | 43.09% | 42.84% | 42.30% | 40.71% | 39.62% | 38.39% |
| Net profit margin | 36.15% | 35.79% | 35.43% | 35.61% | 35.96% | 36.43% | 36.27% | 35.31% | 34.15% | 33.25% | 33.05% | 34.37% | 36.69% | 37.63% | 38.50% | 38.51% | 36.45% | 35.02% | 33.47% | 32.29% |
The analysis of Microsoft Corporation's profitability ratios over the period from September 2020 to June 2025 reveals an overall positive trend, with certain fluctuations.
Gross Profit Margin:
Microsoft maintains a consistently high gross profit margin, predominantly ranging from approximately 68.16% to 69.89%. Starting at 68.27% in September 2020, there is a gradual upward trend observed, culminating at 69.89% as of March 2024. Notably, the gross margin reaches its peak in March 2024, slightly above 69.8%, indicative of sustained efficiency in core operations and effective cost management in the production or procurement of goods and services. The margin stabilizes at near 69.35% in September 2024 before witnessing minor fluctuations, suggesting stable pricing strategies and cost controls.
Operating Profit Margin:
This ratio demonstrates a steady increase over the analyzed period, moving from 38.17% in September 2020 to approximately 45.62% in June 2025. The upward trend suggests improvements in operational efficiency and effective management of operating expenses relative to revenue. The continuous growth, including notable increases in late 2023 and into 2024, indicates that the company has been able to enhance profitability from its core business activities, possibly through economies of scale, product mix optimization, or cost rationalization.
Pretax Margin:
The pretax margin exhibits a similar positive trend, reflecting the company's ability to retain more profit before taxes relative to its revenues. Starting at 38.39% in September 2020, it increases progressively, reaching around 43.88% by June 2025. This consistent improvement indicates enhanced operational efficiency and possibly favorable shifts in revenue composition or cost structure management that are maintained before tax considerations.
Net Profit Margin:
The net profit margin also shows an overall upward trend, rising from 32.29% in September 2020 to approximately 36.15% in June 2025. Despite some fluctuations, particularly a decline observed between September 2022 and September 2022, the trend stabilizes and gradually improves. This indicates that after accounting for all expenses, including taxes, Microsoft is able to convert a higher proportion of revenues into net income, reflecting effective profitability management and possibly advantageous tax strategies.
Overall Assessment:
The data suggest that Microsoft has experienced sustained enhancements in profitability across all key ratios over the analyzed period. The high and stable gross profit margin indicates robust pricing power and cost control at the cost of goods sold. The steady increases in operating, pretax, and net profit margins reflect improved operational efficiency, cost management, and overall profitability. Minor fluctuations are consistent with normal business variability but do not detract from the overall positive trajectory. These trends collectively demonstrate Microsoft’s effective strategic management which has resulted in improved profitability and value creation for shareholders during this period.
Return on investment
| Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 20.76% | 21.71% | 22.05% | 21.62% | 21.37% | 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% |
| Return on assets (ROA) | 16.45% | 17.18% | 17.37% | 17.31% | 17.21% | 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% |
| Return on total capital | 36.69% | 37.51% | 38.42% | 39.54% | 41.24% | 42.28% | 43.09% | 43.33% | 43.32% | 44.21% | 45.65% | 49.68% | 51.51% | 52.02% | 51.20% | 51.19% | 51.73% | 50.26% | 48.52% | 47.83% |
| Return on equity (ROE) | 29.65% | 30.02% | 30.64% | 31.46% | 32.83% | 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% |
Microsoft Corporation’s profitability ratios over the period from September 2020 to June 2025 reflect a nuanced trend with periods of growth and moderation, indicative of evolving operational efficiency and financial leverage.
Operating Return on Assets (Operating ROA) exhibits an overall upward trajectory from 18.65% in September 2020 to a peak near 23.78% in March 2022, suggesting improvements in core operational efficiency relative to total assets. After this peak, a slight decline occurs, with ratios oscillating around approximately 21% in subsequent periods, stabilizing near 21.37% as of June 2024, and exhibiting minor fluctuations thereafter. This indicates that operational profitability—before considering financial leverage—has experienced some moderation following periods of robust growth.
Return on Assets (ROA) shows a similar trend but at generally lower levels compared to Operating ROA, starting at 15.78% in September 2020 and reaching approximately 21.03% in March 2022. Post-2022, a gradual decline is observed, with figures decreasing to approximately 17.21% in June 2024 and stabilizing around 17.2%–17.4%. This trend suggests that overall asset efficiency, inclusive of financing effects and other factors, has been relatively stable but slightly declining in the recent periods.
Return on Total Capital reflects the overall effectiveness of all capital sources employed by the company. The ratio begins at 47.83% in September 2020, rising steadily to a peak of over 52% in March 2022, indicating strong capital productivity during that period. Subsequently, a downward trend ensues, reaching approximately 36.69% as of June 2025, implying a decrease in the efficiency of deploying total capital or potential dilution effects.
Return on Equity (ROE) demonstrates a pronounced upward trajectory from 38.49% in September 2020 to a peak exceeding 44.67% in September 2021. Thereafter, a decline is observed, with ratios decreasing to around 29.65% by June 2025, reflecting a reduction in equity-based profitability albeit maintaining a relatively high level throughout.
In aggregate, Microsoft’s profitability ratios indicate that the company experienced significant growth in operational efficiency and capital returns through 2021 but has faced diminishing profitability margins in subsequent periods. The decline in both ROA and ROE, particularly since 2022, could be attributed to various factors including market conditions, competitive pressures, or changes in operating leverage. Nonetheless, the ratios remain indicative of a financially resilient entity with substantial profit-generating capability relative to its assets and capital base.