The review of Net Profit Margin witnessed a surging trend. The Net Profit Margin improved from 34.15% in 2019 to 31.18% in 2023.
The average EBIT Margin for the period under analysis was 40.2%, with 2019 and 2021 performing the worst and best, respectively.
In the current year, Microsoft was able to cover its debt 46.38 times in the current year- 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 increased year on year. The revenue increased by 13.65% between 2019 and 2020 and a further 17.53% increase was recorded between 2020 and 2021. 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 the current ratio/acid test decreased from 2.53/2.35:1 to 1.77:1/1.54:1 in 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.
