Microsoft Corporation (MSFT)
Solvency ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.91 | 2.00 | 2.19 | 2.35 | 2.55 |
Based on the provided data, Microsoft Corporation has consistently maintained a strong solvency position over the past five years.
Debt-to-assets ratio: Microsoft's debt-to-assets ratio has been consistently at 0.00 over the five-year period, indicating that the company has no debt in relation to its total assets. This reflects a low financial risk and a strong ability to cover obligations using its asset base.
Debt-to-capital ratio: Similarly, the debt-to-capital ratio has remained at 0.00 throughout the period, suggesting that the company's capital structure is predominantly equity-funded rather than debt-funded. This implies a low reliance on debt for funding its operations and investments.
Debt-to-equity ratio: Microsoft's debt-to-equity ratio has also consistently stood at 0.00 over the five-year period, reaffirming the company's low debt levels in comparison to its equity. This indicates that shareholders have a higher stake in the company's capital structure than creditors.
Financial leverage ratio: The financial leverage ratio, which measures the company's level of financial risk by comparing its total assets to its equity, has shown a decreasing trend from 2.55 in 2020 to 1.91 in 2024. This decreasing trend signifies that Microsoft has been reducing its dependence on debt and becoming more equity-financed over the years, contributing to a more stable financial position.
In conclusion, Microsoft Corporation's solvency ratios demonstrate a strong financial position with low levels of debt and a conservative capital structure. This indicates the company's ability to comfortably meet its financial obligations and withstand economic challenges.
Coverage ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 37.72 | 46.38 | 41.58 | 31.31 | 21.47 |
The interest coverage ratio for Microsoft Corporation has shown a consistent and strong upward trend over the past five years. In June 2020, the interest coverage ratio stood at 21.47, indicating that the company had more than enough operating income to cover its interest expenses. This trend continued to improve significantly, reaching 31.31 in June 2021 and further increasing to 41.58 in June 2022. By June 2023, the interest coverage ratio had surged to 46.38, reflecting an even higher ability to cover interest payments. However, in June 2024, there was a slight decrease in the ratio to 37.72, though it still remains at a healthy level. Overall, the consistently high and increasing interest coverage ratios demonstrate Microsoft's strong financial position and ability to comfortably meet its interest obligations from its operating income.