Microsoft: Brief Summary

Microsoft's headquarters is located in Redmond, Washington.  The company competes in the software infrastructure sector—specifically, the technology industry.  At present, the organization employs approximately 160,000 individuals.  Microsoft sells its products on a global scale, with a heavy presence in the United States, Europe, Asia, and the Middle East.  Their main revenue generators are software license sales, game sales, hardware, and cloud computing services.

From a financial perspective, Microsoft's market capitalization is about $1.6 trillion.  Their beta is .82.  This indicates that the company's stock is slightly less risky as compared to the overall market.  Its stock price range for the last 52 weeks has been between $132.52 to $232.86.  In the last year, their dividend payout has increased moderately.  At present, the dividend yield is 1.06%.

Microsoft Financial Report Sources

“Microsoft 2022 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA., and owner of Quality Business Plan.  In this book, the author selected Microsoft's 2018 10k, 2017 10k annual report, 2016 10k annual report, 2022 10k annual report, and Microsoft's 2019 10k annual report as the basis for information gathering. 

 

Section 1: Microsoft Income Statement Analyzed

Revenues:  

Microsoft’s revenues in 2018 were $110.3 billion.  In 2022, their revenues were $198.2 billion.  On average, this is an annual growth rate of 15.8%.  This trend indicates the organization is doing a decent job in growing revenues year over year.  From an investor’s perspective, this is a good trend.

Analyst Grade: A

Microsoft 2021 Summary Income Statement
Column1	2021	2020	2019	2018	2017
Revenues	168,088	143,015	125,843	110,360	89,950
COGS	52,232	46,078	42,910	38,353	34,261
Gross Profit	115,856	96,937	82,933	72,007	55,689
SG&A	25,224	24,709	23,098	22,223	20,020
Depreciation	11,686	12,796	11,682	10,261	8,778
R & D	20,716	19,269	16,876	14,726	13,037
Other			-	-	-
Total Operating Expenses	46,585	56,774	39,974	36,949	33,057
EBIT	69,271	52,959	42,959	35,058	22,632
Other Income		-	-	-	-
Interest Expense	2,346	2,591	2,686	2,733	2,222
EBT	71,102	53,036	43,688	36,474	23,149
Taxes	9,831	8,755	4,448	19,903	1,945
Net Income	61,271	44,291	39,240	16,571	21,204

 

 

Section 2: Microsoft Balance Sheet Analyzed

For Microsoft Inc. balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define Microsoft’s balance sheet line item, such as cash, property, plant and equipment, and liabilities.  Next, I then offer a summary analysis of Microsoft’s essential balance sheet line items.

Cash: 

Microsoft’s cash holding in 2018 was $11.9 billion or 10.8% as compared to sales.  In 2022, their cash position was $13.9 billion, or 7% of sales.  This trend indicates that the organization was able to decrease its cash position as compared to sales from the previously stated year.  This decrease elevates Microsoft’s ability to fully utilize its cash for growth and other opportunities.  From an investor’s perspective, this is a good trend.

Analyst Grade: A

Microsoft 2021 Summary Balance Sheet
Column1	2021	2020	2019	2018	2017
Cash	14,224	13,576	11,356	11,946	7,663
Short Term Investment	116,110	122,951	122,463	121,822	125,318
Account Receivable	38,043	32,011	29,524	26,481	19,792
Inventory	2,636	1,895	2,063	2,662	2,181
Other	-	-	-	-	-
Current Assets	184,406	181,915	175,552	169,662	159,851
Net PPE	59,715	52,904	43,856	36,146	23,734
Goodwill	49,711	43,351	42,026	35,683	35,122
Other	-	-	-	-	-
Total Assets	333,779	301,311	286,556	258,848	241,086
Accounts Payable	15,163	12,530	9,382	8,617	7,390
Accrued Expense	10,057	7,874	6,830	6,103	5,819
Accrued Taxes	2,174	2,130	5,665	2,121	718
Notes Payable		-	-	-	9,072
LT Debt - Current	8,072	3,749	5,516	3,998	6,280
Other	-	-	-	-	-
Total Current Liabilities	88,657	72,310	69,420	58,488	64,527
LT Debt	50,074	59,578	66,662	72,242	76,073
Other	-	-	-	-	-
Total Liabilities	191,791	183,007	184,226	176,130	168,692
Common Stock	83,111	80,552	78,520	71,223	69,315
Treasury	-	-	-	-	-
Retained Earnings	57,055	34,566	24,150	13,682	2,648
Other	-	-	-	-	-
Total Equity	141,988	118,304	102,330	82,718	72,394
Total Equity & Liability	333,779	301,311	286,556	258,848	241,086

 

Section 3: Microsoft Financial Ratios Analyzed

For this section, I have chosen several different financial ratios to review for Microsoft.  In reviewing each of Microsoft’s financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Microsoft’s Important Financial ratios. 

Microsoft Current Ratio

Microsoft’s current ratio is 2018 was 2.9.  In 2022, their current ratio was 1.78.  This trend indicates that the organization is better aligning its current assets as compared to its current liabilities.  However, the firm would be served better by obtaining a current ratio closer to 1.0.  From this, investors should consider this a good trend.

Analyst Grade: B

Microsoft Return on Assets

Microsoft’s return on assets (ROA) in 2018 was 6.4%.  In 2022, their ROA was 19.94%.  This trend indicates the organization is increasing the utilization of assets under management for revenue generation purposes.  From an investor’s perspective, this is a good trend.  Making more money with the same or fewer assets… Sweet!

Analyst Grade: A