Microsoft Corporation (MSFT)

Return on equity (ROE)

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Net income	US$ in thousands	101,832,000	88,136,000	72,361,000	72,738,000	61,271,000
Total stockholders’ equity	US$ in thousands	343,479,000	268,477,000	206,223,000	166,542,000	141,988,000
ROE		29.65%	32.83%	35.09%	43.68%	43.15%

June 30, 2025 calculation

ROE = Net income ÷ Total stockholders’ equity
= $101,832,000K ÷ $343,479,000K
= 29.65%

The analysis of Microsoft Corporation's return on equity (ROE) over the period from June 30, 2021, through June 30, 2025, reveals a notable decline in profitability relative to shareholders’ equity.

At the end of the fiscal year June 30, 2021, the ROE stood at 43.15%, indicating a highly efficient utilization of shareholders’ equity to generate net income. This figure slightly increased to 43.68% by June 30, 2022, suggesting a marginal improvement in profitability and operational efficiency.

However, beginning with the fiscal year ending June 30, 2023, the ROE experienced a significant downward trend, declining to 35.09%. This decline further persisted into the following fiscal year ending June 30, 2024, with ROE decreasing to 32.83%. The downward trajectory continued into June 2025, with the ROE reaching 29.65%.

This decreasing pattern suggests a gradual erosion of profitability margins relative to shareholders’ equity. Several factors could contribute to this trend, including increased equity base, tighter profit margins, changes in net income levels, or shifts in capital structure.

The overall decline from over 43% in 2021 to below 30% in 2025 indicates a reduction in the company's efficiency in generating profit from shareholders’ investments. While current levels remain relatively high, the persistent downward movement warrants further analysis into the underlying causes, such as profit margin compression, increased equity accumulation, or strategic repositioning, to assess the long-term implications for Microsoft's profitability and shareholder value.