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Microsoft Corp (NAS:MSFT)
Current Ratio
3.22 (As of Mar. 2014)

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated as a company's Total Current Assets divides by its Total Current Liabilities. Microsoft Corp's current ratio for the quarter that ended in Mar. 2014 was 3.22.

Microsoft Corp has a current ratio of 3.22. It indicates the company may not be efficiently using its current assets or its short-term financing facilities. This may also indicate problems in working capital management.

MSFT' s 10-Year Current Ratio Range
Min: 1.45   Max: 4.71
Current: 3.22

1.45
4.71

During the past 13 years, Microsoft Corp's highest Current Ratio was 4.71. The lowest was 1.45. And the median was 2.89.

MSFT's Current Ratiois ranked higher than
81% of the 1659 Companies
in the Global Software - Infrastructure industry.

( Industry Median: 1.92 vs. MSFT: 3.22 )

Definition

The current ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities with its short-term assets.

Microsoft Corp's Current Ratio for the fiscal year that ended in Jun. 2013 is calculated as

Current Ratio (A: Jun. 2013 )=Total Current Assets (A: Jun. 2013 )/Total Current Liabilities (A: Jun. 2013 )
=101466/37417
=2.71

Microsoft Corp's Current Ratio for the quarter that ended in Mar. 2014 is calculated as

Current Ratio (Q: Mar. 2014 )=Total Current Assets (Q: Mar. 2014 )/Total Current Liabilities (Q: Mar. 2014 )
=109006/33903
=3.22

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations. Because business operations differ in each industry, it is always more useful to compare companies within the same industry.

Acceptable current ratios vary from industry to industry and are generally between 1 and 3 for healthy businesses.

The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt - as there are many ways to access financing - but it is definitely not a good sign.

If all other things were equal, a creditor, who is expecting to be paid in the next 12 months, would consider a high current ratio to be better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which fall due in the next 12 months.


Related Terms

Total Current Assets, Total Current Liabilities, Quick Ratio


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Microsoft Corp Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
current ratio 2.892.181.691.451.822.132.602.602.712.50

Microsoft Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
current ratio 2.942.602.682.812.932.712.873.173.222.50
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