Microsoft Corporation (MSFT)
Return on total capital
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 126,012,000 | 120,732,000 | 116,288,000 | 113,764,000 | 110,722,000 | 107,025,000 | 102,667,000 | 95,631,000 | 89,340,000 | 86,069,000 | 83,593,000 | 86,234,000 | 85,779,000 | 84,754,000 | 81,930,000 | 77,798,000 | 73,448,000 | 67,598,000 | 63,186,000 | 59,017,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 343,479,000 | 321,891,000 | 302,695,000 | 287,723,000 | 268,477,000 | 253,152,000 | 238,268,000 | 220,714,000 | 206,223,000 | 194,683,000 | 183,136,000 | 173,566,000 | 166,542,000 | 162,924,000 | 160,010,000 | 151,978,000 | 141,988,000 | 134,505,000 | 130,236,000 | 123,392,000 |
| 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% |
June 30, 2025 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $126,012,000K ÷ ($—K + $343,479,000K)
= 36.69%
The analysis of Microsoft Corporation’s return on total capital (ROTC) over the period from September 30, 2020, to June 30, 2025, reveals a notable downward trend. Initially, the ROTC was approximately 47.83% in September 2020, gradually increasing to a peak of around 52.02% in March 2022. This period of growth indicates that the company was efficiently utilizing its total capital to generate earnings, reflecting strong operational performance and effective capital management.
However, starting from late 2022, a persistent decline in ROTC is observed. By December 2022, the ratio decreased to approximately 45.65%, and this downward trajectory continued through subsequent quarters. As of June 2025, the ROTC had declined to roughly 36.69%. The consistent reduction in ROTC suggests diminishing efficiency in generating returns relative to total capital employed. Several factors could contribute to this trend, including increased capital expenditures, changes in operational margins, or shifts in the company’s strategic focus.
Overall, the depreciation of ROTC from its peak indicates that while Microsoft remained a profitable enterprise, its relative efficiency in leveraging total capital for earnings has diminished over this period. This trend warrants further analysis into underlying operational changes, investment strategies, or market conditions that may be impacting the company’s ability to sustain higher returns on its total capital base.
Peer comparison
Jun 30, 2025