Microsoft Corporation (MSFT)

Financial leverage 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
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
Total stockholders’ equity	US$ in thousands	287,723,000	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	118,304,000	114,501,000	110,109,000	106,061,000
Financial leverage ratio		1.82	1.91	1.97	2.02	2.00	1.95	1.99	2.07	2.19	2.12	2.13	2.21	2.35	2.30	2.34	2.44	2.55	2.49	2.57	2.63

September 30, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $523,013,000K ÷ $287,723,000K
= 1.82

The financial leverage ratio of Microsoft Corporation has exhibited fluctuations over the past several quarters, ranging from 1.82 to 2.63. This ratio indicates the degree of financial leverage employed by the company to support its operations and growth. A higher financial leverage ratio signifies a greater reliance on debt financing to fund operations and investments.

In the recent quarters, the financial leverage ratio has generally been on an upward trend, reaching a peak of 2.63 in the last quarter. This suggests an increasing level of debt relative to equity in the company's capital structure. It is important to note that a high financial leverage ratio can amplify both returns and risks for shareholders, as financial leverage can magnify gains in good times but also increase losses in adverse conditions.

Microsoft's management may be using debt strategically to finance growth opportunities or acquisitions, taking advantage of relatively low interest rates in the current economic environment. However, investors and stakeholders should closely monitor the company's ability to manage debt levels and service obligations, particularly in light of potential interest rate fluctuations and economic uncertainties. Additionally, a higher financial leverage ratio may indicate a lower financial stability and liquidity of the company, which could pose risks under adverse economic conditions.