Microsoft

 

Key Performance Metrics

  • The review of Net Profit Margin witnessed a fluctuating trend. The Net Profit Margin moved from 31.18% in 2019 to 34.15% in 2023.
  • The average EBIT Margin for the period under analysis was 41.15%, with 2019 and 2021 performing the worst and best, respectively.
  • In the current year, Microsoft was able to cover its liabilities 46.38 times – compared to 2019 when it was 17.27 times.
  • The Asset turnover stood at 0.56 times in 2023 from 0.47 in 2019, implying a high performance on Assets of the business in relation to revenue.

Profitability

  • The revenue of Microsoft has fluctuated year on year. The revenue increased by 13.65% between 2019 and 2020 and a further 17.96% increase was recorded between 2021 and 2022. There also occurred an increase of 6.88% between 2022 and 2023 (the current period). 
  • Microsoft’s performance in profitability looks good as the return on capital employed also recorded good performance during the period of analysis.

Liquidity

  • The company’s result in liquidity looks poor, as current ratio decreased from 1.79:1 to 1.77:1 on the last year. Which implies that the company does not have enough assets to settle its current liabilities.

Capital Structure

  • Microsoft is both equity and debt financed.
  • The debt-to-equity (D/E) ratio has been increasing year on year. The gearing position of the company appears to be high as it stood at 29% in the current year.

Source: Microsoft Annual Report

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