Microsoft Corporation (MSFT)
Interest coverage
| Dec 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 117,167,000 | 113,323,000 | 107,980,000 | 103,622,000 | 97,016,000 | 91,279,000 | 87,053,000 | 84,577,000 | 86,788,000 | 85,779,000 | 84,754,000 | 81,930,000 | 77,798,000 | 73,448,000 | 67,598,000 | 63,186,000 | 59,017,000 | 55,627,000 | 54,784,000 | 52,484,000 |
| Interest expense (ttm) | US$ in thousands | 2,885,000 | 2,816,000 | 2,716,000 | 2,412,000 | 1,993,000 | 1,968,000 | 1,982,000 | 1,989,000 | 2,024,000 | 2,063,000 | 2,120,000 | 2,250,000 | 2,296,000 | 2,346,000 | 2,479,000 | 2,460,000 | 2,543,000 | 2,591,000 | 2,574,000 | 2,631,000 |
| Interest coverage | 40.61 | 40.24 | 39.76 | 42.96 | 48.68 | 46.38 | 43.92 | 42.52 | 42.88 | 41.58 | 39.98 | 36.41 | 33.88 | 31.31 | 27.27 | 25.69 | 23.21 | 21.47 | 21.28 | 19.95 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $117,167,000K ÷ $2,885,000K
= 40.61
The interest coverage ratio of Microsoft Corporation has shown a consistent upward trend from December 2019 to December 2024. The ratio has increased steadily from 19.95 in December 2019 to 40.61 in December 2024. This indicates that Microsoft's ability to cover its interest expenses has improved over the years.
The company's interest coverage ratio has generally been strong, surpassing 20 from March 2020 onwards, reflecting a healthy financial position. The ratio reached its peak of 48.68 in September 2023, indicating a strong capability to cover interest payments by the company's earnings.
However, there was a slight decrease in the interest coverage ratio in the subsequent periods, dropping to 39.76 in March 2024 and further declining to 40.24 in September 2024. This could be a signal for analysts to monitor the company's ability to service its debt in the future, although the ratio remains above 20, which is generally considered a healthy level.
Overall, the upward trend in Microsoft Corporation's interest coverage ratio indicates a positive financial performance and the company's ability to meet its interest obligations comfortably over the analyzed period.
Peer comparison
Dec 31, 2024