Microsoft Corp.
[MSFT]
NASDAQ
MVPro™ Score: 74/100
Next Earnings: 28 Apr 2026
[MSFT]
NASDAQ
MVPro™ Score: 74/100
Next Earnings: 28 Apr 2026
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| Capitalization (mln USD) | 2,951,022 |
| Revenue (mln USD) | 81,273 |
| EBITDA (mln USD) | 58,180 |
| Net Income (mln USD) | 38,458 |
| Net Margin | 47.32% |
| EPS Ratio (TTM, USD) | 16.05 |
| P/E Ratio (TTM) | 24.74 |
| P/S Ratio (TTM) | 10.62 |
| D/E Ratio | 0.7 |
| EV/EBITDA (TTM) | 17.81 |
| CAPEX (Q/Q) | 54.85% |
| Dividend Yield | 0.91% |
Revenue, EBITDA & Net Income
Company Overview
Microsoft Corporation is a global technology company founded in 1975 by Bill Gates and Paul Allen. Headquartered in Redmond, Washington, USA, the company has grown to become one of the world’s leading providers of software, services, and digital solutions. Since 2014, Microsoft has been led by CEO Satya Nadella, under whose leadership the company has significantly expanded its presence in cloud computing and artificial intelligence.
Microsoft’s core offerings include the Windows operating system, Microsoft 365 productivity suite, Azure cloud platform, and enterprise services. The company is also active in the consumer technology space through products such as Xbox gaming consoles and Surface devices. Microsoft serves both individual and business customers, with operations spanning across more than 190 countries and a client base in virtually every industry sector.
Committed to its mission to empower every person and every organisation on the planet to achieve more, Microsoft places strong emphasis on innovation, accessibility, and sustainability. The company actively integrates Environmental, Social and Governance (ESG) principles into its strategy, aiming for carbon negativity, digital inclusion, and ethical AI development. Through its diverse portfolio and global reach, Microsoft remains a key player in shaping the future of technology and responsible corporate leadership.
🟡 P/E (Price to Earnings, TTM)
Price-to-earnings (P/E) ratio for the most recent quarter is 27.2, compared to 37.8 in the previous quarter, with a longer-term trend value of 27.2. This decline in the P/E ratio may indicate a shift in market sentiment, where investors are placing a lower premium on future earnings growth. A falling P/E ratio could be driven by slowing revenue growth, increased risk perception, or improved earnings performance that is outpacing stock price growth.
P/E Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports (TTM)
P/E Ratio
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🟢 EPS (Earnings Per Share, TTM)
Microsoft's earnings per share (EPS) for the most recent quarter is 16.05 USD (+13.74%), compared to 14.11 USD in the previous quarter, with a longer-term trend value of 16.58 USD. This quarterly increase in EPS suggests improved profitability and operational efficiency.
EPS
Source: MarketVectors.Pro, Microsoft Financial Reports (TTM, USD)
EPS
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🔴 P/B (Price to Book)
Price-to-book (P/B) ratio for the most recent quarter stands at 8.30 (-24.0%), compared to 10.92 in the previous quarter, with a long-term trend value of 8.14. This decline in the P/B ratio may indicate a more conservative market stance on the company’s asset valuation, potentially influenced by shifting investor sentiment, changes in financial fundamentals, or broader economic conditions.
P/B Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports
P/B Ratio
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🟢 EBIT
EBIT for Microsoft in the most recent quarter is 38,275 million USD, compared to 37,961 million USD in the previous quarter, with a long-term trend value of 38,680 million USD. This increase reflects improved operational performance and higher profitability, aligning with the long-term growth trajectory.
EBIT
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
EBIT
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🟡 Risk Assessment
Below is a factual risk assessment for Microsoft Corporation, taking into account key categories of corporate and market exposure:
Market Risk
Microsoft is exposed to fluctuations in global demand for technology and software solutions, particularly in enterprise and cloud services. Volatility in currency exchange rates and macroeconomic conditions, such as inflation or recession, may affect customer spending and profitability in international markets.
Financial Risk
Although Microsoft maintains a strong balance sheet with consistent cash flow, it remains susceptible to changes in interest rates and capital market conditions. A significant portion of its revenue is derived from subscription-based models, which could be impacted by customer churn or pricing pressures.
Operational Risk
The company faces operational risks related to cybersecurity, data privacy, and potential outages in its cloud infrastructure. Additionally, Microsoft must continuously innovate and adapt its product offerings to remain competitive in a rapidly evolving technology landscape.
Regulatory Risk
Microsoft operates under increasing scrutiny from regulatory bodies, especially regarding antitrust laws, data protection regulations such as the GDPR, and competition in cloud and AI markets. Failure to comply with evolving legal standards could result in fines or operational restrictions in certain regions.
Overall Risk Assessment
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🟢 Piotroski F-Score Analysis
Piotroski F-Score analysis is a robust methodology designed to assess the financial strength and operational efficiency of companies, providing valuable insights for investment decision-making.
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
| Previous TTM | Current TTM | Score | |
| Net Income | 92,750 | 119,262 | 1 |
| ROA | 18.07% | 19.21% | 1 |
| Net Operating Cash Flow | 532 | 6,660 | 1 |
| OCF > Net Income | 32,833 | 41,244 | 1 |
| Long-Term Debt | 167,936 | 150,835 | 1 |
| Current Ratio | 1.35 | 1.39 | 1 |
| New Shares Issued (mln) | 7,468 | 7,429 | 1 |
| Gross Margin | 69.41% | 68.59% | 0 |
| Total Asset Turnover Ratio | 0.51 | 0.49 | 0 |
| Piotroski F-Score | 7/9 |
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🟢 Altman Z-Score Analysis
Altman Z-Score is a widely recognised financial metric used to evaluate the risk of bankruptcy for companies. It is particularly relevant for assessing the creditworthiness of manufacturing and industrial companies but has also been adapted for other industries.
Source: MarketVectors.Pro, Microsoft Financial Reports
| Q4 25 | |||
| Altman Z-Score (TTM) | 10.96 | ||
| 0 | Distress | 1.8 | Grey | 2.99 | Safe | 4 |
Source: MarketVectors.Pro, Microsoft Financial Reports
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🟡 Key Assets Components
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
As of last quarter the company reported total assets of 665,302 million USD, representing an increase of 24.6% compared to the previous year the same quarter 533,898 million USD. The largest contributor to this change in current assets was Cash & Short-Term Inv, which grew by 25.0% to 89,456 million USD from 71,555 million USD.
Assets
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
| Q4 24 | Q4 25 | Change (%) | |
| Cash & Short-Term Inv | 71,555 | 89,456 | 25.02% |
| Inventory | 909 | 1,059 | 16.50% |
| Receivables | 48,188 | 56,535 | 17.32% |
| Total Current Assets | 147,080 | 180,190 | 22.51% |
| Property and Equipment | 166,902 | 286,229 | 71.50% |
| Goodwill, Intangibles | 144,576 | 139,911 | -3.23% |
| Other Long-Term Assets | 36,943 | 37,770 | 2.24% |
| Total Assets | 533,898 | 665,302 | 24.61% |
Assets
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🔴 Key Liabilities & Equity
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Total current liabilities increased by 19.4%, indicating a potential growth in operational activities. This change may affect the company's ability to manage its working capital efficiently. Long-term debt decreased by 10.8%, suggesting a reduction in financial leverage. This shift could have implications for the Microsoft's financing costs and overall debt strategy.
Liabilities & Equity
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
| Q4 24 | Q4 25 | Change (%) | |
| Accounts Payable | 22,608 | 37,328 | 65.11% |
| Accrued Expenses, Other | 13,784 | 15,623 | 13.34% |
| Total Current Liabilities | 108,882 | 130,005 | 19.40% |
| Long-term Lease | 17,254 | 17,345 | 0.53% |
| Long-term Debt | 39,722 | 35,425 | -10.82% |
| Total Liabilities | 231,203 | 274,427 | 18.70% |
| Shareholders’ Equity | 302,695 | 390,875 | 29.13% |
Liabilities & Equity
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🟢 Income Statement Analysis
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
As of Q4 25, Microsoft reported a revenue of 81,273 million USD, marking an increase of 16.7% compared to the previous year to 69,632 million USD. Operating expenses rose to 17,020 million USD, increasing by 5.4% year-on-year from 16,147 million USD.
Revenue & Net Income
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
| Q4 24 | Q4 25 | Change (%) | |
| Revenue | 69,632 | 81,273 | 16.72% |
| Operating Expenses | 16,147 | 17,020 | 5.41% |
| Operating Income | 31,653 | 38,275 | 20.92% |
| Net Income | 24,108 | 38,458 | 59.52% |
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Revenue & Net Income
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🟡 Cash Flow Analysis
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
The company’s cash flow performance over the year demonstrates varied trends across key categories. Net operating cash flows increased by 60.4% from 22,291 million USD to 35,758 million USD, reflecting stronger cash generation from core business activities. Net investing cash flows decreased by 60.9% from -14,112 million USD to -22,705 million USD, indicating higher expenditure on investments, potentially related to strategic initiatives.
Operating Cash Flow
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
| Q4 24 | Q4 25 | Change (%) | |
| Net Operating Cash Flows | 22,291 | 35,758 | 60.41% |
| Net Investing Cash Flows | -14,112 | -22,705 | -60.89% |
| Net Financing Cash Flows | -11,243 | -17,617 | -56.69% |
| Net Cash Flow, Equivalents | -3,064 | -4,564 | -48.96% |
Operating Cash Flow
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🟢 EBITDA
Microsoft's EBITDA for the most recent quarter is 58,180 milion USD (+21.1%), compared to 48,060 milion USD in the previous quarter, with a long-term trend value of 59,520 milion USD. This increase in EBITDA suggests improved operational efficiency and revenue growth, indicating stronger core business performance.
EBITDA
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
EBITDA
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🟢 Net Income
Net income for the most recent quarter is 38,458 milion USD (+38.6%), compared to 27,747 milion USD in the previous quarter, with a long-term trend value of 39,226 milion USD. This increase in net income reflects improved profitability, potentially driven by higher revenue growth, enhanced cost efficiency, or favorable market conditions.
Net Income
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Net Income
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🟢 ROE (Return on Equity, %) ★ Buffett's Key Metric
Microsoft's return on equity (ROE) for the most recent quarter is 30.5%, compared to 28.9% in the previous quarter, with a long-term trend value of 29.9%. This increase in ROE indicates improved profitability and more efficient use of shareholders' equity to generate earnings.
ROE Indicator
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
ROE Indicator
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🟢 ROA (Return on Assets, %)
Return on assets (ROA) for the most recent quarter is 17.9%, compared to 16.5% in the previous quarter, with a long-term trend value of 17.9%. This increase in ROA indicates improved efficiency in utilizing company assets to generate profits. The higher return suggests stronger operational performance and effective resource allocation.
ROA Indicator
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
ROA Indicator
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🟡 Operating Margin (%) ★ Buffett's Key Metric
Microsoft's operating margin for the most recent quarter is 47.1%, compared to 48.9% in the previous quarter, with a long-term trend value of 48.0%. This decline in operating margin may indicate increased production or operational costs, pricing pressures, or lower revenue retention. A reduction in margin suggests that certain cost components are weighing on profitability, potentially requiring adjustments in expense management.
Operating Margin
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
Operating Margin
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🟢 Net Margin (%) ★ Buffett's Key Metric
Net margin for the most recent quarter is 47.3%, compared to 35.7% in the previous quarter, with a long-term trend value of 48.7%. This increase in net margin suggests improved profitability, reflecting stronger cost control, enhanced operational efficiency, or higher revenue retention. The company appears to be effectively managing expenses while maintaining revenue growth, contributing to improved bottom-line performance.
Net Margin
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
Net Margin
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🟢 Long-Term Debt & EBITDA
The current long-term debt is 35,425 million USD, and EBITDA is 58,180 million USD. The long-term debt to EBITDA ratio for the most recent quarter is 61%, compared to 74% in the previous quarter, with a long-term trend value of 58%. This decline in the long-term debt to EBITDA ratio suggests an improvement in the company's ability to manage and service its long-term debt obligations. The lower ratio indicates stronger financial flexibility, potentially driven by higher earnings generation or reduced leverage.
Long-Term Debt to EBITDA Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
The current level remains within the safe range, reflecting a strong balance sheet and manageable debt levels. A declining trend in this ratio is typically a positive sign for investors, as it implies reduced financial risk and an improved capacity to meet long-term liabilities.
Long-Term Debt & EBITDA
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Long-Term Debt to EBITDA Ratio
The current level remains within the safe range, reflecting a strong balance sheet and manageable debt levels. A declining trend in this ratio is typically a positive sign for investors, as it implies reduced financial risk and an improved capacity to meet long-term liabilities.
Long-Term Debt & EBITDA
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🟢 Long-Term Debt & Assets
The current long-term debt is 35,425 million USD, and total assets are 665,302 million USD, resulting in a debt ratio of 5.3%. This decline in the long-term debt-to-assets ratio indicates an improvement in financial stability, as the company is reducing its reliance on long-term debt relative to its total assets. This suggests either an increase in total assets or a reduction in outstanding long-term liabilities.
Long-Term Debt to Assets Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
The current level remains within the safe range <40%, reflecting a strong balance sheet and a conservative debt structure. A declining debt-to-assets ratio is generally seen as a positive signal for investors, as it implies lower financial risk and greater balance sheet resilience.
Long-Term Debt & Assets
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Long-Term Debt to Assets Ratio
The current level remains within the safe range <40%, reflecting a strong balance sheet and a conservative debt structure. A declining debt-to-assets ratio is generally seen as a positive signal for investors, as it implies lower financial risk and greater balance sheet resilience.
Long-Term Debt & Assets
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🟢 Long-Term Debt & Equity ★ Buffett's Key Metric
The current long-term debt is 35,425 million USD, while Total Equity stands at 390,875 million USD, resulting in a debt-to-equity ratio of 9.1%. This decline in the long-term debt-to-equity ratio suggests improved financial strength, as the company is reducing its reliance on debt financing relative to its equity base. This may be the result of increased retained earnings, debt repayments, or higher equity financing, all of which contribute to a healthier balance sheet.
Long-Term Debt to Equity Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
The current ratio remains within the safe range <50%, indicating a strong balance sheet with low financial risk and a conservative capital structure. A declining debt-to-equity ratio is generally a positive signal for investors, reflecting reduced leverage and improved financial flexibility.
Long-Term Debt & Equity
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Long-Term Debt to Equity Ratio
The current ratio remains within the safe range <50%, indicating a strong balance sheet with low financial risk and a conservative capital structure. A declining debt-to-equity ratio is generally a positive signal for investors, reflecting reduced leverage and improved financial flexibility.
Long-Term Debt & Equity
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🟢 Equity to Assets
The current equity is 390,875 million USD, while total assets stand at 665,302 million USD, resulting in an equity-to-assets ratio of 58.8%. This increase in the equity-to-assets ratio indicates a strengthening financial position, as the company is relying more on its own capital rather than external debt. The rise suggests higher retained earnings, new equity issuance, or asset appreciation, all of which contribute to long-term financial stability.
Equity to Assets Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports (%)
The current ratio remains in the strong financial stability above the 50%, indicating that the company is well-capitalized and relies primarily on shareholder equity to fund its assets. A rising equity-to-assets ratio is generally a positive sign for investors, as it indicates lower financial risk and improved capital structure.
Equity & Assets
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Equity to Assets Ratio
The current ratio remains in the strong financial stability above the 50%, indicating that the company is well-capitalized and relies primarily on shareholder equity to fund its assets. A rising equity-to-assets ratio is generally a positive sign for investors, as it indicates lower financial risk and improved capital structure.
Equity & Assets
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🟢 Quick Ratio
The quick ratio for Microsoft is 1.38, compared to 1.39 in the previous quarter, with a long-term trend value of 1.35. This decline in the quick ratio may indicate lower liquidity, reduced cash reserves, or an increase in short-term liabilities. Although the ratio has declined, it remains above 1.0, which still reflects strong liquidity; however, the downward trend should be monitored.
Quick Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports
Quick Ratio
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🟢 Current Ratio
The current ratio for Microsoft is 1.39, compared to 1.40 in the previous quarter, with a long-term trend value of 1.35. This decline in the current ratio may indicate a higher reliance on short-term liabilities, reduced cash flow, or increased working capital constraints. Despite the decrease, the ratio remains within the 1.0–2.0 range, which is still considered healthy, though further monitoring of working capital efficiency is advisable.
Current Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports
Current Ratio
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🟡 Net Working Capital
The net working capital (NWC) for Microsoft in the most recent quarter is 50,185 million USD, compared to 54,070 million USD in the previous quarter, with a long-term trend value of 50,385 million USD.
Net Working Capital
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Net Working Capital
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🟢 Inventory Turnover Ratio
The inventory turnover ratio for Microsoft in the most recent quarter is 90.61, compared to 86.66 in the previous quarter. This increase in inventory turnover indicates that Microsoft is selling goods more rapidly, suggesting strong demand, efficient inventory management, and optimized supply chain processes. The turnover ratio is above the 6.0, reflecting high inventory efficiency and fast-moving stock, which minimizes storage costs and obsolescence risks.
Inventory Turnover Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports
Inventory Turnover Ratio
🔴 Asset Turnover Ratio
The assets turnover ratio for Microsoft in the most recent quarter is 0.46, compared to 0.46 in the previous quarter. This decline in the assets turnover ratio may suggest lower revenue generation, excess assets, or inefficiencies in assets utilization. A decreasing trend could indicate weaker sales growth or an overinvestment in fixed assets. The ratio has fallen below the 1.0, suggesting that Microsoft may have a high level of assets relative to revenue generation. This could indicate underutilized resources or the need for improved asset efficiency.
Assets Turnover Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports
Assets Turnover Ratio
🔴 Book Value / Share
The book value per share (BVPS) is a key valuation metric that represents the equity value per outstanding share. Calculated by dividing total book value by the number of shares, it helps assess whether a stock trades above or below its book value.
Source: MarketVectors.Pro, Microsoft Financial Reports (USD)
Book Value per Share Valuation
Source: MarketVectors.Pro, Microsoft Financial Reports (USD, generated on 21 February 2026)
| Q4 24 | Q4 25 | Change (%) | |
| Book Value / Share | 40.53 | 52.61 | 29.81 % |
Book Value per Share Valuation
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🟢 Graham Method
The intrinsic value of Microsoft’s stock is calculated using Benjamin Graham’s formula, which takes into account the current earnings per share (EPS) and an assumed growth rate (g), providing a simplified yet insightful perspective on a company’s value.
Benjamin Graham Valuation
Source: MarketVectors.Pro, Microsoft Financial Reports (USD, generated on 21 February 2026)
Benjamin Graham Valuation
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🟡 Discounted Cash Flow ★ Buffett's Key Metric
The discounted cash flow (DCF) method is used to estimate Microsoft’s intrinsic value by projecting future cash flows and discounting them to their present value. This approach considers the company’s potential to generate cash flows in the future, taking into account the time value of money and associated risks.
The terminal value represents the value of Microsoft’s cash flows beyond the five-year forecast horizon. It is calculated using the Gordon Growth Model, assuming a perpetual growth rate of 6.3% and WACC of 9.7%. The calculated terminal value is 4,716,807 million USD.
Total Intrinsic Value Calculations
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Assuming 7,429 million shares outstanding, the intrinsic value per share is approximately 454.76 USD. The current market price of Microsoft’s stock is 397.23 USD. Discounted cash flow valuation indicates that the stock is 12.6% undervalued, trading below its intrinsic value.
Discounted Cash Flow Valuation
Source: MarketVectors.Pro, Microsoft Financial Reports (USD, generated on 21 February 2026)
| Value | |
| Present Value of FCFs | 413,407 |
| Present Value of Terminal Value | 2,964,976 |
| Total Intrinsic Value | 3,378,383 |
Discounted Cash Flow Valuation
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🟢 Assets Correlation
The Pearson correlation analysis for Microsoft examines the relationship between share price and key financial indicators. Gross profit has a correlation of 0.98, which indicates a strong relationship, meaning profitability is a key driver of stock price movements. Operating income is correlated at 0.97, highlighting a strong relationship between operating profitability and market valuation.
Source: MarketVectors.Pro, Microsoft Financial Reports
Current liabilities are correlated at 0.96, implying that short-term obligations are closely monitored by investors, influencing stock valuation. Total assets have a correlation of 0.97, confirming a strong relationship between asset growth and market performance.
Key Financial Indicators Growth Dynamics
Source: MarketVectors.Pro, Microsoft Financial Reports, Index=100 on Q2 11
| Pearson Correlation | |
| Share Price | 1 |
| Gross Profit | 0.98 |
| Operating Income | 0.97 |
| Current Liabilities | 0.96 |
| Total Assets | 0.97 |
Key Financial Indicators Growth Dynamics
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🟡 FCF Margin Scenarios
• Optimistic Scenario: 33%, driven by operational efficiencies and cost optimisation.
• Base Case: 25% of revenue, consistent with historical trends.
• Pessimistic Scenario: 18%, reflecting higher operating and labour costs. Impact of Changes in FCF Margin
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
An approximately 8-percentage-point increase in the FCF margin to 33%, results in an additional 23,287 milion USD in FCF, highlighting the critical role of operational efficiency. Conversely, a decrease to 18% reduces FCF by 22,530 milion USD, illustrating the significant impact of profitability on cash flow generation.
Projected FCF Margin Scenarios Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
• Base Case: 25% of revenue, consistent with historical trends.
• Pessimistic Scenario: 18%, reflecting higher operating and labour costs. Impact of Changes in FCF Margin
| FCF Margin (%) | Revenue TTM | FCF TTM | Difference | |
| Optimistic | 33% | 305,453 | 100,799 | 23,287 |
| Base Case | 25% | 305,453 | 77,512 | – |
| Pessimistic | 18% | 305,453 | 54,982 | -22,530 |
Projected FCF Margin Scenarios Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
🟡 Operating Costs Scenarios
• Optimistic Scenario: 52%, reflecting enhanced efficiency and lower costs.
• Base Case: 53% of revenue, aligned with historical trends and cost structures.
• Pessimistic Scenario: 55%, driven by rising wages and increased energy costs. Impact of Changes in FCF Margin
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Reducing operational costs to 52% of revenue leads to a 4,058 milion USD increase in operating profit, emphasising the significance of cost control in enhancing margins. Increasing costs to 55% of revenue results in a 5,105 milion USD decline in operating profit, highlighting the sensitivity of profitability to rising expenses.
Projected Operating Costs Scenarios Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
• Base Case: 53% of revenue, aligned with historical trends and cost structures.
• Pessimistic Scenario: 55%, driven by rising wages and increased energy costs. Impact of Changes in FCF Margin
| Operating Costs (%) | Revenue TTM | Operating Profit | Difference | |
| Optimistic | 52% | 305,453 | 146,617 | 4,058 |
| Base Case | 53% | 305,453 | 142,559 | – |
| Pessimistic | 55% | 305,453 | 137,454 | -5,105 |
Projected Operating Costs Scenarios Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
🟡 Revenue Growth Scenarios
Optimistic Scenario: Projected to grow by 18% annually, driven by:
• Robust macroeconomic conditions.
• Strong industry growth with minimal disruptions.
• Favorable regulatory and competitive environment. Base Case: Projected to grow by 15% annually, driven by: • Stable macroeconomic conditions.
• Balanced market growth with manageable risks.
• Limited external disruptions from regulation or supply chains. Pessimistic Scenario: Projected to grow by 12% annually, driven by: • Global economic uncertainty and potential downturn.
• Increased competition and rising operational costs.
• Regulatory and supply chain challenges impacting business operations.
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD, TTM)
The projected revenue for the next twelve months varies depending on the scenario. Under the optimistic scenario, revenue is expected to increase by 18% to 359,651 million USD, reflecting strong market growth and operational efficiency. In the base case scenario, revenue is forecasted to grow by 15% to 350,618 million USD, assuming stable economic conditions and consistent business expansion. However, under the pessimistic scenario, revenue is projected to increase by 12% to 341,585 million USD, reflecting potential economic slowdowns or adverse market conditions.
Projected Revenues Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
The variation between projected scenarios highlights the Microsoft's ability to perform across a range of market conditions. The growth even in the pessimistic case reflects a degree of resilience and suggests a strong underlying business model. This outlook supports confidence in management’s ability to navigate uncertainty while sustaining forward momentum. Scenario analysis enhances strategic visibility, helping stakeholders understand the potential bandwidth of future results.
• Strong industry growth with minimal disruptions.
• Favorable regulatory and competitive environment. Base Case: Projected to grow by 15% annually, driven by: • Stable macroeconomic conditions.
• Balanced market growth with manageable risks.
• Limited external disruptions from regulation or supply chains. Pessimistic Scenario: Projected to grow by 12% annually, driven by: • Global economic uncertainty and potential downturn.
• Increased competition and rising operational costs.
• Regulatory and supply chain challenges impacting business operations.
| Revenue | Net Income | Revenue (Next) | Net Income (Next) | |
| Optimistic | 305,453 | 119,262 | 359,651 | 140,423 |
| Base Case | 305,453 | 119,262 | 350,618 | 136,896 |
| Pessimistic | 305,453 | 119,262 | 341,585 | 133,369 |
Projected Revenues Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
The variation between projected scenarios highlights the Microsoft's ability to perform across a range of market conditions. The growth even in the pessimistic case reflects a degree of resilience and suggests a strong underlying business model. This outlook supports confidence in management’s ability to navigate uncertainty while sustaining forward momentum. Scenario analysis enhances strategic visibility, helping stakeholders understand the potential bandwidth of future results.
🟡 Net Income Growth Scenarios
The projected net income for the next twelve months varies depending on the scenario. Under the optimistic scenario, net income is expected to increase by 18% to 140,423 million USD, reflecting improved profitability and strong financial performance. In the base case scenario, net income is forecasted to grow by 15% to 136,896 million USD, assuming stable market conditions and effective cost management. However, under the pessimistic scenario, net income is projected to increase by 12% to 133,369 million USD, reflecting potential challenges such as higher operational costs or slowing revenue growth.
Projected Net Income Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
The projected resilience in net income across all scenarios suggests a stable underlying profitability profile. Even under adverse assumptions, the Microsoft is expected to maintain earnings growth, indicating effective cost controls and strong core operations. This consistency can help support valuation multiples and reduce perceived investment risk. Scenario modeling enhances transparency and strengthens the credibility of financial forecasting in the eyes of stakeholders.
Projected Net Income Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
The projected resilience in net income across all scenarios suggests a stable underlying profitability profile. Even under adverse assumptions, the Microsoft is expected to maintain earnings growth, indicating effective cost controls and strong core operations. This consistency can help support valuation multiples and reduce perceived investment risk. Scenario modeling enhances transparency and strengthens the credibility of financial forecasting in the eyes of stakeholders.
🟢 Financial Performance Overview
Microsoft demonstrated stronger financial performance in the most recent period, reflecting strong revenue growth, operational efficiency, and profitability improvements revenue increased by 16.7% year-over-year, reaching 81,273 million USD, supported by strong sales performance across all key markets. At the same time, EBITDA grew by 51.2% year-over-year, totaling 58,180 million USD, driven by cost optimization and higher-margin business segments.
Revenue & Net Income
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Notably, net income surged by 59.5% year-over-year, reaching 38,458 million USD, improving Microsoft's net margin, which expanded to 47.3%. This growth reflects effective expense control and revenue expansion, strengthening the company’s bottom-line performance.
Revenue & Net Income
Notably, net income surged by 59.5% year-over-year, reaching 38,458 million USD, improving Microsoft's net margin, which expanded to 47.3%. This growth reflects effective expense control and revenue expansion, strengthening the company’s bottom-line performance.
Key Performance Indicators (KPIs)
Source: MarketVectors.Pro, Microsoft Financial Reports (YoY)
Valuation & Market Position
Microsoft’s valuation metrics indicate a strengthened financial standing. The EV to EBITDA (TTM) ratio currently stands at 17.81, decreasing from 23.94, reflecting a dual shift – rising operational performance and declining market valuation. This indicates a balanced valuation, with stable investor perception
EV to EBITDA Ratio
Source: MarketVectors.Pro, Microsoft Financial Reports (TTM)
The EV to EBITDA trendline illustrates Microsoft’s valuation trajectory, with a declining enterprise value despite improving earnings, possibly signaling undervaluation or market pessimism.
Source: MarketVectors.Pro, Microsoft Financial Reports (TTM)
Meanwhile, the P/E (Price to Earnings) ratio has declined to 27.2, down from 28.9 a year ago, potentially signaling a more balanced market outlook on Microsoft’s earnings potential. The P/S (Price to Sales) ratio has risen to 10.62, compared to 10.35 a year ago, reinforcing Microsoft’s higher market capitalization relative to revenue.
| Change (%) | |
| Revenue Growth | 16.7% |
| EBITDA Growth | 51.2% |
| Net Income Growth | 59.5% |
| Net Margin | 47.3% |
| EPS | 29.3% |
EV to EBITDA Ratio
The EV to EBITDA trendline illustrates Microsoft’s valuation trajectory, with a declining enterprise value despite improving earnings, possibly signaling undervaluation or market pessimism.
| Ratio (TTM) | |
| EV/EBITDA | 17.81 |
| P/E Ratio | 24.74 |
| P/S Ratio | 10.62 |
Cash Flow & Liquidity ★ Buffett's Key Metric
Microsoft is experiencing a weakened cash flow position, reflecting potential liquidity challenges. The decline in cash flow may indicate increased operational costs or reduced cash inflows, requiring closer financial monitoring and strategic adjustments.
• Free Cash Flow (FCF) – totaled 5,882 million USD, indicating a decline in available cash resources, requiring enhanced financial oversight.
• Net Operating Cash Flow – increased by 1151.9% year-over-year, reaching 6,660 million USD, showcasing strong core business cash generation.
• Long-term debt – decreased by 10.2%, strengthening the company’s financial structure and reducing interest burdens.
Microsoft’s ability to generate substantial cash flow while reducing debt reinforces its financial flexibility, allowing for potential future investments in innovation, logistics, and technology expansion.
Free Cash Flow
Source: MarketVectors.Pro, Microsoft Financial Reports (million USD)
Microsoft's financial performance in the most recent quarter shows that EBITDA reached 58,180 million USD, reflecting improved operational efficiency and earnings growth. The company's return on equity (ROE) is 30.5%, suggesting enhanced capital utilization and stronger profitability. The long-term debt-to-equity ratio stands at 9.1%, indicating a more resilient balance sheet and lower financial risk. The quick ratio is 1.38, highlighting tightened liquidity conditions and the need for cautious cash management. The EV/EBITDA ratio is currently 17.81x, reflecting a balanced or attractive valuation level relative to earnings. Overall, Microsoft’s financial health remains strong, with consistent revenue expansion, cost efficiency improvements, and strong liquidity. Meanwhile, the P/E ratio is declining, while Microsoft’s long-term prospects remain positive.
Free Cash Flow
Microsoft's financial performance in the most recent quarter shows that EBITDA reached 58,180 million USD, reflecting improved operational efficiency and earnings growth. The company's return on equity (ROE) is 30.5%, suggesting enhanced capital utilization and stronger profitability. The long-term debt-to-equity ratio stands at 9.1%, indicating a more resilient balance sheet and lower financial risk. The quick ratio is 1.38, highlighting tightened liquidity conditions and the need for cautious cash management. The EV/EBITDA ratio is currently 17.81x, reflecting a balanced or attractive valuation level relative to earnings. Overall, Microsoft’s financial health remains strong, with consistent revenue expansion, cost efficiency improvements, and strong liquidity. Meanwhile, the P/E ratio is declining, while Microsoft’s long-term prospects remain positive.
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