Microsoft Corporation (MSFT)
Solvency ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
| Debt-to-capital ratio | 0.13 | 0.14 | 0.16 | 0.16 | 0.17 | 0.18 | 0.19 | 0.21 | 0.22 | 0.23 | 0.23 | 0.25 | 0.26 | 0.27 | 0.30 | 0.32 | 0.33 | 0.35 | 0.37 | 0.39 |
| Debt-to-equity ratio | 0.15 | 0.17 | 0.19 | 0.19 | 0.20 | 0.22 | 0.24 | 0.26 | 0.28 | 0.30 | 0.30 | 0.33 | 0.35 | 0.37 | 0.42 | 0.46 | 0.50 | 0.55 | 0.58 | 0.63 |
| 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 |
The solvency ratios of Microsoft Corporation provide insights into the company's ability to meet its financial obligations and manage its debt levels over time.
The debt-to-assets ratio has been relatively stable over the period analyzed, ranging from 0.08 to 0.24. This indicates that, on average, Microsoft's total debt has comprised between 8% to 24% of its total assets. A lower debt-to-assets ratio implies a lower financial risk for the company as it suggests that a smaller portion of its assets is financed by debt.
The debt-to-capital ratio reflects how much of Microsoft's capital structure is funded by debt. It has shown a gradual increase from 0.13 to 0.39, indicating that a larger proportion of the company's capital is being financed through debt over time. This could potentially increase financial risk and interest rate sensitivity for the company.
The debt-to-equity ratio has also been on an upward trend, moving from 0.15 to 0.63. This indicates that Microsoft has been relying more on debt financing relative to equity, which can indicate higher financial leverage and potential risk, as well as a lower level of shareholder ownership in the company's capital structure.
The financial leverage ratio shows the degree to which Microsoft is using debt to finance its assets. The ratio has fluctuated between 1.82 and 2.63, generally trending upwards. A higher financial leverage ratio implies a higher level of financial risk and interest expense for the company.
Overall, while Microsoft has maintained relatively low debt levels compared to its assets and capital, there has been a clear upward trend in its debt levels over the period, indicating a shift towards more debt financing. This trend suggests a potential increase in financial risk and interest rate exposure for the company in the future.
Coverage ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 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 | 18.42 |
The interest coverage ratio for Microsoft Corporation has displayed a generally stable and impressive performance over the past few years. The ratio has consistently remained well above 20, indicating that the company has more than enough operating income to cover its interest expenses.
Microsoft's interest coverage ratio has shown an upward trend from 2019 to 2024, reaching a peak of 48.68 in September 2023. This suggests a strong ability to meet its interest obligations and a healthy financial position.
The company's interest coverage ratio exceeding 20 consistently demonstrates its robust profitability and cash flow generation capabilities, providing an assurance of its ability to pay off its debt obligations. This stability and strength in interest coverage reflect positively on Microsoft's financial health and operational efficiency.