Microsoft Corporation (MSFT)

Debt-to-assets ratio

		Sep 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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Long-term debt	US$ in thousands	42,868,000	42,658,000	44,928,000	41,946,000	41,990,000	41,965,000	44,119,000	45,374,000	47,032,000	48,177,000	48,260,000	50,039,000	50,074,000	50,007,000	55,136,000	57,055,000	59,578,000	62,862,000	63,361,000	66,478,000
Total assets	US$ in thousands	523,013,000	484,275,000	470,558,000	445,785,000	411,976,000	380,088,000	364,552,000	359,784,000	364,840,000	344,607,000	340,389,000	335,418,000	333,779,000	308,879,000	304,137,000	301,001,000	301,311,000	285,449,000	282,794,000	278,955,000
Debt-to-assets ratio		0.08	0.09	0.10	0.09	0.10	0.11	0.12	0.13	0.13	0.14	0.14	0.15	0.15	0.16	0.18	0.19	0.20	0.22	0.22	0.24

September 30, 2024 calculation

Debt-to-assets ratio = Long-term debt ÷ Total assets
= $42,868,000K ÷ $523,013,000K
= 0.08

The debt-to-assets ratio of Microsoft Corporation has been gradually increasing over the past several quarters, indicating a higher proportion of debt relative to total assets. As of Sep 30, 2024, the ratio stands at 0.08, showing that only 8% of the company's assets are financed by debt. This suggests that Microsoft has a strong financial position with a lower reliance on debt to fund its operations and investments.

However, the upward trend in the debt-to-assets ratio over the past few years, reaching a peak of 0.24 as of Dec 31, 2019, may indicate a strategic shift towards utilizing more debt in its capital structure or significant investment in assets funded by borrowing. While a higher debt-to-assets ratio can enhance returns on equity through leverage, it also increases financial risk, as the company becomes more vulnerable to changes in interest rates and economic conditions.

It would be important for stakeholders to monitor Microsoft's debt levels and assess the company's ability to manage its debt obligations sustainably, considering factors such as cash flow generation, profitability, and overall financial health. Additional analysis, such as comparing the debt-to-assets ratio with industry peers and historical benchmarks, would provide further insights into Microsoft's capital structure and financial sustainability.