Microsoft Corporation (MSFT)

Return on equity (ROE)

		Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Net income	US$ in thousands	72,361,000	72,738,000	61,271,000	44,281,000	39,240,000
Total stockholders’ equity	US$ in thousands	206,223,000	166,542,000	141,988,000	118,304,000	102,330,000
ROE		35.09%	43.68%	43.15%	37.43%	38.35%

June 30, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $72,361,000K ÷ $206,223,000K
= 35.09%

The return on equity (ROE) is an important financial ratio that measures a company's ability to generate profit from its shareholders' equity. Microsoft Corporation's ROE for the last five years is as follows: 35.09% in 2023, 43.68% in 2022, 43.15% in 2021, 37.43% in 2020, and 38.35% in 2019.

The ROE of Microsoft Corporation has shown a fluctuating trend over the last five years. In 2022, the ROE was at its highest at 43.68%, indicating that the company generated an impressive 43.68% return on every dollar of shareholders' equity. This suggests that Microsoft effectively utilized its equity to generate profit, reflecting strong performance and efficient allocation of capital.

The drop in the ROE to 35.09% in 2023 suggests a decrease in the company's ability to generate profit from shareholder equity compared to the previous year. However, it is important to note that an ROE of 35.09% is still considered high and indicates that the company continues to be efficient in generating profits from shareholders' equity.

The trend in the ROE over the five-year period indicates that Microsoft has maintained a relatively high return on equity, reflecting its ability to effectively use shareholder funds to generate earnings. However, the fluctuations in the ratio over the years could indicate changes in the company's financial structure, profit margins, or asset management efficiency.

Overall, the ROE analysis suggests that Microsoft Corporation has been consistently generating strong returns on shareholders' equity, with the recent decrease in 2023 being a point of interest for further investigation into the company's financial performance and potential implications for shareholder value.