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Microsoft Altman Z-Score

: 8.27 (As of Today)
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Good Sign:

Altman Z-score of 8.27 is strong.

Microsoft has a Altman Z-Score of 8.27, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Microsoft's Altman Z-Score or its related term are showing as below:

MSFT' s Altman Z-Score Range Over the Past 10 Years
Min: 3.38   Med: 11.4   Max: 35.38
Current: 8.27

During the past 13 years, Microsoft's highest Altman Z-Score was 35.38. The lowest was 3.38. And the median was 11.40.


Microsoft Altman Z-Score Historical Data

The historical data trend for Microsoft's Altman Z-Score 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.

* Premium members only.

Microsoft Annual Data
Trend Jun13 Jun14 Jun15 Jun16 Jun17 Jun18 Jun19 Jun20 Jun21 Jun22
Altman Z-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.09 4.87 6.73 8.19 7.69

Microsoft Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Altman Z-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.19 8.83 10.38 9.58 7.69

Competitive Comparison

For the Software - Infrastructure subindustry, Microsoft's Altman Z-Score, along with its competitors' market caps and Altman Z-Score 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 Altman Z-Score Distribution

For the Software industry and Technology sector, Microsoft's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Microsoft's Altman Z-Score falls into.



Microsoft Altman Z-Score Calculation

Altman 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.

Microsoft's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.2045+1.4*0.231+3.3*0.2351+0.6*10.6401+1.0*0.5434
=8.27

* 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. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Jun. 2022:
Total Assets was $364,840 Mil.
Total Current Assets was $169,684 Mil.
Total Current Liabilities was $95,082 Mil.
Retained Earnings was $84,281 Mil.
Pre-Tax Income was 20487 + 20190 + 22515 + 20524 = $83,716 Mil.
Interest Expense was -496 + -503 + -525 + -539 = $-2,063 Mil.
Revenue was 51865 + 49360 + 51728 + 45317 = $198,270 Mil.
Market Cap (Today) was $2,109,912 Mil.
Total Liabilities was $198,298 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(169684 - 95082)/364840
=0.2045

X2=Retained Earnings/Total Assets
=84281/364840
=0.231

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(83716 - -2063)/364840
=0.2351

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=2109912.190/198298
=10.6401

X5=Revenue/Total Assets
=198270/364840
=0.5434

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Microsoft has a Altman Z-Score of 8.27 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Microsoft  (NAS:MSFT) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Microsoft Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Microsoft's Altman Z-Score 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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