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Microsoft Financial Strength

: 8 (As of Jun. 2022)
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Microsoft has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.

Good Sign:

Microsoft Corp shows strong financial strength.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Microsoft's Interest Coverage for the quarter that ended in Jun. 2022 was 41.40. Microsoft's debt to revenue ratio for the quarter that ended in Jun. 2022 was 0.30. As of today, Microsoft's Altman Z-Score is 8.46.


Competitive Comparison

For the Software - Infrastructure subindustry, Microsoft's Financial Strength, along with its competitors' market caps and Financial Strength 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 Financial Strength Distribution

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

* The bar in red indicates where Microsoft's Financial Strength falls into.



Microsoft Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

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

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:

Microsoft's Interest Expense for the months ended in Jun. 2022 was $-496 Mil. Its Operating Income for the months ended in Jun. 2022 was $20,534 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2022 was $58,521 Mil.

Microsoft's Interest Coverage for the quarter that ended in Jun. 2022 is

Interest Coverage=-1*Operating Income (Q: Jun. 2022 )/Interest Expense (Q: Jun. 2022 )
=-1*20534/-496
=41.40

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

Microsoft's Debt to Revenue Ratio for the quarter that ended in Jun. 2022 is

Debt to Revenue Ratio=Total Debt (Q: Jun. 2022 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(2749 + 58521) / 207460
=0.30

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Microsoft has a Z-score of 8.46, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 8.46 is strong.

* 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.


Microsoft  (NAS:MSFT) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Microsoft has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.


Microsoft Financial Strength Related Terms

Thank you for viewing the detailed overview of Microsoft's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.


Microsoft Business Description

Microsoft logo
Address
One Microsoft Way, Redmond, WA, USA, 98052-6399
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
Rodriguez Carlos A director 10200 SUNSET DRIVE MIAMI FL 33173
Young Christopher David officer: EVP, Business Development C/O MICROSOFT CORPORATION ONE MICROSOFT WAY REDMOND WA 98052-6399
Althoff Judson officer: EVP, Chief Commercial Officer MICROSOFT CORPORATION ONE MICROSOFT WAY REDMOND WA 98052
Stanton John W director 3650 131ST AVE SE #400 WESTERN WIRELESS CORP BELLEVUE WA 98006
Johnston Hugh F director PEPSICO, INC. 700 ANDERSON HILL ROAD PURCHASE NY 10577
Scharf Charles W director C/O VISA INC. 900 METRO CENTER BLVD. FOSTER CITY CA 94404
Peterson Sandra E director 100 PARSONS POND DRIVE FRANKLIN LAKES NJ 07417
Pritzker Penny S director C/O PRITZKER FAMILY OFFICE, L.L.C. 300 N. LASALLE STREET, SUITE 1500 CHICAGO IL 60654
Warrior Padmasree director C/O GAP INC. 2 FOLSOM STREET SAN FRANCISCO CA 94105
Hoffman Reid director C/O LINKEDIN CORPORATION 2029 STIERLIN COURT MOUNTAIN VIEW CA 94043
List Teri director 2200 PENNSYLVANIA AVENUE SUITE 800W WASHINGTON DC 20037
Walmsley Emma N director C/O MICROSOFT CORPORATION ONE MICROSOFT WAY REDMOND WA 98052-6399
Hogan Kathleen T officer: EVP, Human Resources C/O MICROSOFT CORPORATION ONE MICROSOFT WAY REDMOND WA 98052-6399
Nadella Satya director, officer: Chief Executive Officer C/O MICROSOFT CORPORATION ONE MICROSOFT WAY REDMOND WA 98052-6399
Courtois Jean Philippe officer: Executive Vice President MICROSOFT CORPORATION ONE MICROSOFT WAY REDMOND WA 98052-6399

Microsoft Headlines

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