Microsoft (Microsoft) Interest Coverage

: 29.74 (As of Dec. 2023)

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Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income by its Interest Expense. Microsoft's Operating Income for the three months ended in Dec. 2023 was $27,032 Mil. Microsoft's Interest Expense for the three months ended in Dec. 2023 was $-909 Mil. Microsoft's interest coverage for the quarter that ended in Dec. 2023 was 29.74. The higher the ratio, the stronger the company's financial strength is.

The historical rank and industry rank for Microsoft's Interest Coverage or its related term are showing as below:

MSFT' s Interest Coverage Range Over the Past 10 Years
Min: 12.83 Med: 25.84 Max: 46.71
Current: 41.68

MSFT's Interest Coverage is ranked better than
55.18% of 1602 companies
in the Software industry
Industry Median: 29.54 vs MSFT: 41.68

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Microsoft Interest Coverage Historical Data

The historical data trend for Microsoft's Interest Coverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Note: For Interest Coverage, "No debt" indicates no long-term debt. An indication of "No Debt" does not necessarily mean that the company has no long-term debt obligations; it could be due to missing data in the quarterly or annual report. Use caution when interpreting this information.

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Microsoft Annual Data

Trend

Jun14

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

Interest Coverage

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15.99

20.44

29.80

40.42

44.98

Microsoft Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Interest Coverage	Get a 7-Day Free Trial															41.63	45.06	50.32	51.23	29.74

Competitive Comparison

For the Software - Infrastructure subindustry, Microsoft's Interest Coverage, along with its competitors' market caps and Interest Coverage data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Microsoft Interest Coverage Distribution

For the Software industry and Technology sector, Microsoft's Interest Coverage distribution charts can be found below:

* The bar in red indicates where Microsoft's Interest Coverage falls into.

Microsoft Interest Coverage Calculation

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

If Interest Expense is negative and Operating Income is positive, then

Interest Coverage

-1

Operating Income

Interest Expense

Else if Interest Expense is negative and Operating Income is negative, then

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt & Capital Lease Obligation is 0, then

The company had no debt ⁽¹⁾.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Microsoft's Interest Coverage for the fiscal year that ended in Jun. 2023 is calculated as

Here, for the fiscal year that ended in Jun. 2023, Microsoft's Interest Expense was $-1,968 Mil. Its Operating Income was $88,523 Mil. And its Long-Term Debt & Capital Lease Obligation was $54,718 Mil.

Interest Coverage	=	-1	*	Operating Income (A: Jun. 2023 )	/	Interest Expense (A: Jun. 2023 )
	=	-1	*	88523	/	-1968
	=	44.98

Microsoft's Interest Coverage for the quarter that ended in Dec. 2023 is calculated as

Here, for the three months ended in Dec. 2023, Microsoft's Interest Expense was $-909 Mil. Its Operating Income was $27,032 Mil. And its Long-Term Debt & Capital Lease Obligation was $59,083 Mil.

Interest Coverage	=	-1	*	Operating Income (Q: Dec. 2023 )	/	Interest Expense (Q: Dec. 2023 )
	=	-1	*	27032	/	-909
	=	29.74

The higher the ratio, the stronger the company's Financial Strength is.

Microsoft (NAS:MSFT) Interest Coverage Explanation

Ben Graham requires that a company has a minimum interest coverage of 5 with the companies he invested. If the interest coverage is less than 2, the company is burdened by debt. Any business slow or recession may drag the company into a situation where it cannot pay the interest on its debt.

Interest Coverage is an important factor when GuruFocus ranks a company's overage Financial Strength .

Microsoft Interest Coverage Related Terms

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Microsoft (Microsoft) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Microsoft Corp (NAS:MSFT) » Definitions » Interest Coverage

Comparable Companies

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Address

One Microsoft Way, Redmond, WA, USA, 98052-6399

Website

https://www.microsoft.com

Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).

Executives

Kathleen T Hogan	officer: EVP, Human Resources	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
Judson Althoff	officer: EVP, Chief Commercial Officer	MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052
Satya Nadella	director, officer: Chief Executive Officer	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
Bradford L Smith	officer: Executive Vice President	MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
Teri List	director	2200 PENNSYLVANIA AVENUE, SUITE 800W, WASHINGTON DC 20037
Christopher C Capossela	officer: EVP, Chief Marketing Officer	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
Amy Hood	officer: Chief Financial Officer	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
Emma N Walmsley	director	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
Carlos A Rodriguez	director	10200 SUNSET DRIVE, MIAMI FL 33173
Christopher David Young	officer: EVP, Business Development	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399
John W Stanton	director	3650 131ST AVE SE #400, WESTERN WIRELESS CORP, BELLEVUE WA 98006
Charles W Scharf	director	C/O VISA INC., 900 METRO CENTER BLVD., FOSTER CITY CA 94404
Hugh F Johnston	director	PEPSICO, INC., 700 ANDERSON HILL ROAD, PURCHASE NY 10577
Reid Hoffman	director	C/O LINKEDIN CORPORATION, 2029 STIERLIN COURT, MOUNTAIN VIEW CA 94043
Sandra E Peterson	director	100 PARSONS POND DRIVE, FRANKLIN LAKES NJ 07417