Microsoft Corporation (MSFT)

Interest coverage

		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
Interest expense (ttm)	US$ in thousands	2,385,000	2,471,000	2,677,000	2,992,000	2,935,000	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
Interest coverage		52.84	48.86	43.44	38.02	37.72	39.41	42.57	47.98	45.40	43.43	42.03	42.61	41.58	39.98	36.41	33.88	31.31	27.27	25.69	23.21

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $126,012,000K ÷ $2,385,000K
= 52.84

The interest coverage ratios of Microsoft Corporation over the period from September 2020 through June 2025 demonstrate a consistent pattern of strong and improving ability to meet interest obligations. Beginning at a ratio of 23.21 on September 30, 2020, the indicator exhibited a steady upward trend, reaching a peak of 52.84 by June 30, 2025.

This progression indicates that Microsoft has maintained a robust margin of earnings against its interest expenses, reflecting effective management of its debt service capacity. Throughout the analyzed period, the ratios remained well above typical cautionary thresholds—such as 3.0 or 5.0—highlighting a substantial cushion for interest payments relative to earnings before interest and taxes (EBIT).

The increase from approximately 23.21 to levels exceeding 50 demonstrates a significant improvement in the company's financial health and capacity to comfortably cover interest expenses, which is indicative of sustained profitability and prudent financial management. The ratios' upward trajectory suggests that Microsoft's operating profits have grown at a pace sufficient to enhance its interest coverage ratio, further reducing financial risk.

Overall, the data portrays Microsoft as a financially stable entity with a strong ability to meet its interest obligations over the period, reflecting prudent leverage management and consistent earnings growth.