Microsoft Corporation
Microsoft Corporation is one of the largest multinational companies producing proprietary software for various types of computing devices: personal computers, gaming consoles, PDAs, mobile phones and more - it is a developer of the most widely used software platform in the world - the family of Windows operating systems.
Company divisions also produce a family of Xbox gaming consoles, as well as accessories for personal computers (keyboards, mice, etc.). Since 2012 it produces its own tablet computer - Surface. Microsoft products are sold in more than 80 countries around the world, their programs have been translated into more than 45 languages. The company's headquarters is located in Redmond, Washington, USA.
Results
Vertical analysis
Vertical analysis is a method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement in order to gain a picture of whether performance metrics are improving or deteriorating.
Statement of income
Base figure is Net Revenue = 100 %.
Period
Net Revenue
Cost of sales
Gross Profit
Selling, general & administrative expenses
Other income
Other expenses
Results from operating activities (EBIT)
Interest and other income, net
Profit before tax (EBT)
Tax expenses (provision)
Net profit from continuing operations
Profit/Loss from discontinued operations
Net profit for the year
2015, mln USD
93 580
(33 038)
60 542
(32 370)
0
(10 011)
18 161
346
18 507
(6 314)
12 193
0
12 193
2016, mln USD
91 154
(32 780)
58 374
(31 186)
0
(1 110)
26 078
(439)
25 639
(5 100)
20 539
0
20 539
2017, mln USD
96 571
(34 261)
62 310
(32 979)
0
(306)
29 025
876
29 901
(4 412)
25 489
0
25 489
2018, mln USD
110 360
(38 353)
72 007
(36 949)
0
0
35 058
1 416
36 474
(19 903)
16 571
0
16 571
2015, %
100.00
(35.30)
64.70
(34.59)
0.00
(10.70)
19.41
0.37
19.78
(6.75)
13.03
0.00
13.03
2016, %
100.00
(35.96)
64.04
(34.21)
0.00
(1.22)
28.61
(0.48)
28.13
(5.59)
22.53
0.00
22.53
2017, %
100.00
(35.48)
64.52
(34.15)
0.00
(0.32)
30.06
0.91
30.96
(4.57)
26.39
0.00
26.39
2018, %
100.00
(34.75)
65.25
(33.48)
0.00
0.00
31.77
1.28
33.05
(18.03)
15.02
0.00
15.02
Main earnings components in mln USD
20152016201720180300006000090000120000
  • Revenue
  • Gross profit
  • EBIT
  • EBT
  • Net profit
Main earnings components in % (Revenue = 100%)
20152016201720180255075100
  • Revenue
  • Gross profit
  • EBIT
  • EBT
  • Net profit
Statement of financial position
Base figure is Total assets / Total equity and liabilities = 100 %.
Period
Property, plant and equipment
Goodwill
Intangible assets
Other non-current assets
Total non-current assets
Inventories
Trade receivables
Cash and cash equivalents
Other current assets
Total current assets
Total assets
Share capital
Additional Paid-In Capital
Retained earnings
Treasury stock
Capital Surplus
Other equity
Total equity
Long term debt
Other non-current liabilities
Total non-current liabilities
Short-term debt
Accounts payable
Accrued liabilities
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
2015, mln USD
14 731
16 939
4 835
15 170
51 675
2 902
17 908
96 526
5 461
122 797
174 472
68 465
0
9 096
0
0
2 522
80 083
27 808
16 934
44 742
4 985
6 591
5 096
32 975
49 647
94 389
174 472
2016, mln USD
18 356
17 872
3 733
13 847
53 808
2 251
18 277
113 240
5 892
139 660
193 468
68 178
0
2 282
0
0
1 537
71 997
40 557
21 557
62 114
12 904
6 898
5 264
34 291
59 357
121 471
193 468
2017, mln USD
23 734
35 122
10 106
18 654
87 616
2 181
22 431
132 981
22 431
162 696
250 312
69 315
0
17 769
0
0
627
87 711
76 073
30 783
106 856
9 072
7 390
5 819
33 464
55 745
162 601
250 312
2018, mln USD
29 460
35 683
8 053
15 990
89 186
2 662
26 481
133 768
26 481
169 662
258 848
71 223
0
13 682
0
0
(2 187)
82 718
72 242
45 400
117 642
0
8 617
6 103
43 768
58 488
176 130
258 848
2015, %
8.44
9.71
2.77
8.69
29.62
1.66
10.26
55.32
3.13
70.38
100.00
39.24
0.00
5.21
0.00
0.00
1.45
45.90
15.94
9.71
25.64
2.86
3.78
2.92
18.90
28.46
54.10
100.00
2016, %
9.49
9.24
1.93
7.16
27.81
1.16
9.45
58.53
3.05
72.19
100.00
35.24
0.00
1.18
0.00
0.00
0.79
37.21
20.96
11.14
32.11
6.67
3.57
2.72
17.72
30.68
62.79
100.00
2017, %
9.48
14.03
4.04
7.45
35.00
0.87
8.96
53.13
8.96
65.00
100.00
27.69
0.00
7.10
0.00
0.00
0.25
35.04
30.39
12.30
42.69
3.62
2.95
2.32
13.37
22.27
64.96
100.00
2018, %
11.38
13.79
3.11
6.18
34.45
1.03
10.23
51.68
10.23
65.55
100.00
27.52
0.00
5.29
0.00
0.00
(0.84)
31.96
27.91
17.54
45.45
0.00
3.33
2.36
16.91
22.60
68.04
100.00
Assets structure
Assets structure in %
20152016201720180255075100
  • Current assets
  • Non-current assets
Assets structure in mln USD
2015201620172018065000130000195000260000
  • Current assets
  • Non-current assets
Assets structure in %
20152016201720180306090120
  • Property
  • Goodwill
  • Intangible
  • Other non-current assets
  • Inventories
  • Trade receivables
  • Cash
  • Other curren assets
Assets structure in mln USD
2015201620172018070000140000210000280000
  • Property
  • Goodwill
  • Intangible
  • Other non-current assets
  • Inventories
  • Trade receivables
  • Cash
  • Other curren assets
Equity and liabilities structure
Equity and liabilities structure in %
20152016201720180255075100
  • Equity
  • Total Liabilities
Equity and liabilities structure in mln USD
2015201620172018065000130000195000260000
  • Equity
  • Total Liabilities
Horizontal analysis
Horizontal analysis looks at amounts from the financial statements over a horizon of many years. Horizontal analysis is also referred to as trend analysis. The amounts from past financial statements will be restated to be a percentage of the amounts from a base year.
Statement of income
YoY change
Period
Net Revenue
Cost of sales
Gross Profit
Selling, general & administrative expenses
Other income
Other expenses
Results from operating activities (EBIT)
Interest and other income, net
Profit before tax (EBT)
Tax expenses (provision)
Net profit from continuing operations
Profit/Loss from discontinued operations
Net profit for the year
2015, mln USD
93 580
(33 038)
60 542
(32 370)
0
(10 011)
18 161
346
18 507
(6 314)
12 193
0
12 193
2016, mln USD
91 154
(32 780)
58 374
(31 186)
0
(1 110)
26 078
(439)
25 639
(5 100)
20 539
0
20 539
2017, mln USD
96 571
(34 261)
62 310
(32 979)
0
(306)
29 025
876
29 901
(4 412)
25 489
0
25 489
2018, mln USD
110 360
(38 353)
72 007
(36 949)
0
0
35 058
1 416
36 474
(19 903)
16 571
0
16 571
2015 / 2016, %
(2.59)
(0.78)
(3.58)
(3.66)
0.00
(88.91)
43.59
(226.88)
38.54
(19.23)
68.45
0.00
68.45
2016 / 2017, %
5.94
4.52
6.74
5.75
0.00
(72.43)
11.30
(299.54)
16.62
(13.49)
24.10
0.00
24.10
2017 / 2018, %
14.28
11.94
15.56
12.04
0.00
0.00
20.79
61.64
21.98
351.11
(34.99)
0.00
(34.99)
Due to horizontal analysis for 2015 / 2016 period Net profit for the year showed the maximum growth by 68.45 % and Interest and other income, net changed by -226.88 %, which is the minimum percent change. for 2016 / 2017 period Net profit for the year showed the maximum growth by 24.10 % and Interest and other income, net changed by -299.54 %, which is the minimum percent change. for 2017 / 2018 period Tax expenses (provision) showed the maximum growth by 351.11 % and Net profit for the year changed by -34.99 %, which is the minimum percent change.
Statement of financial position
Period
Property, plant and equipment
Goodwill
Intangible assets
Other non-current assets
Total non-current assets
Inventories
Trade receivables
Cash and cash equivalents
Other current assets
Total current assets
Total assets
Share capital
Additional Paid-In Capital
Retained earnings
Treasury stock
Capital Surplus
Other equity
Total equity
Long term debt
Other non-current liabilities
Total non-current liabilities
Short-term debt
Accounts payable
Accrued liabilities
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
2015, mln USD
14 731
16 939
4 835
15 170
51 675
2 902
17 908
96 526
5 461
122 797
174 472
68 465
0
9 096
0
0
2 522
80 083
27 808
16 934
44 742
4 985
6 591
5 096
32 975
49 647
94 389
174 472
2016, mln USD
18 356
17 872
3 733
13 847
53 808
2 251
18 277
113 240
5 892
139 660
193 468
68 178
0
2 282
0
0
1 537
71 997
40 557
21 557
62 114
12 904
6 898
5 264
34 291
59 357
121 471
193 468
2017, mln USD
23 734
35 122
10 106
18 654
87 616
2 181
22 431
132 981
22 431
162 696
250 312
69 315
0
17 769
0
0
627
87 711
76 073
30 783
106 856
9 072
7 390
5 819
33 464
55 745
162 601
250 312
2018, mln USD
29 460
35 683
8 053
15 990
89 186
2 662
26 481
133 768
26 481
169 662
258 848
71 223
0
13 682
0
0
(2 187)
82 718
72 242
45 400
117 642
0
8 617
6 103
43 768
58 488
176 130
258 848
2015 / 2016, %
24.61
5.51
(22.79)
(8.72)
4.13
(22.43)
2.06
17.32
7.89
13.73
10.89
(0.42)
0.00
(74.91)
0.00
0.00
(39.06)
(10.10)
45.85
27.30
38.83
158.86
4.66
3.30
3.99
19.56
28.69
10.89
2016 / 2017, %
29.30
96.52
170.72
34.72
62.83
(3.11)
22.73
17.43
280.70
16.49
29.38
1.67
0.00
678.66
0.00
0.00
(59.21)
21.83
87.57
42.80
72.03
(29.70)
7.13
10.54
(2.41)
(6.09)
33.86
29.38
2017 / 2018, %
24.13
1.60
(20.31)
(14.28)
1.79
22.05
18.06
0.59
18.06
4.28
3.41
2.75
0.00
(23.00)
0.00
0.00
(448.80)
(5.69)
(5.04)
47.48
10.09
0.00
16.60
4.88
30.79
4.92
8.32
3.41
According to horizontal analysis for 2015 / 2016 period Short-term debt showed the maximum growth by 158.86 % and Retained earnings changed by -74.91 %, which is the minimum percent change. for 2016 / 2017 period Retained earnings showed the maximum growth by 678.66 % and Other equity changed by -59.21 %, which is the minimum percent change. for 2017 / 2018 period Other non-current liabilities showed the maximum growth by 47.48 % and Other equity changed by -448.80 %, which is the minimum percent change.
Financial ratio analysis
Period
Formula for calculating
Liquidity ratios
Current ratio
Current Assets / Current Liabilities
Quick ratio
(Current Assets - Inventories) / Current Liabilities
Cash ratio
(Cash and cash equivalents) / Current Liabilities
Working capital
Current assets - Current liabilities
Working capital ratio
Current assets / Current liabilities
Asset management
Inventory turnover
Cost of goods sold / Inventories
Days inventory
365 days / Inventory Turnover
Receivables turnover
Revenue / Receivables
Days Receivables
365 days / Receivables turnover
Fixed assets turnover
Revenue / Net Fixed Assets
Total assets turnover
Revenue / Total assets
Debt management
Debt to assets ratio
(Short-term debt + Long-term debt)/Total assets
Debt to equity ratio
Total liabilities / Total shareholder equity
Long-term debt to equity
Total long-term liabilities / Total shareholder equity
Debt to EBITDA ratio
(Short-term debt + Long-term debt) / EBITDA
Assets to equity ratio
Total assets / Shareholder equity
Profitability
Gross profit margin
Gross Profit / Revenue
EBITDA Margin
EBITDA / Revenue
Operating profit margin
EBIT / Revenue
Net profit margin
Net Profit / Revenue
Return on assets
Net Income / Total Assets
Return on equity
Net Income / Total shareholder equity
2015
2.47
2.41
1.94
73 150.00
2.47
11.38
32.06
5.23
69.85
6.35
0.54
0.54
1.18
0.56
3.96
2.18
0.65
0.25
0.19
0.13
0.07
0.15
2016
2.35
2.31
1.91
80 303.00
2.35
14.56
25.06
4.99
73.18
4.97
0.47
0.63
1.69
0.86
3.78
2.69
0.64
0.35
0.29
0.23
0.11
0.29
2017
2.92
2.88
2.39
106 951.00
2.92
15.71
23.24
4.31
84.78
4.07
0.39
0.65
1.85
1.22
4.25
2.85
0.65
0.40
0.30
0.26
0.10
0.29
2018
2.90
2.86
2.29
111 174.00
2.90
14.41
25.33
4.17
87.58
3.75
0.43
0.68
2.13
1.42
3.69
3.13
0.65
0.43
0.32
0.15
0.06
0.20
Average
2.66
2.62
2.13
92 894.50
2.66
14.02
26.42
4.67
78.85
4.78
0.45
0.62
1.71
1.02
3.92
2.71
0.65
0.36
0.27
0.19
0.09
0.23
Remark
It is optimal.
It is higher than optimal.
It is higher than optimal.
Liquidity position is good.
It is safe.
Depends on industry.
Number of days.
Depends on industry.
Number of days.
Depends on industry.
Depends on industry.
Higher debt financing.
It's optimal.
It's risky from investment view.
It's near the risky level
It's risky from investment view.
Depends on industry.
Depends on industry.
Depends on industry.
Depends on industry.
It's acceptable.
It's acceptable.
Financial ratio analysis explanation
Liquidity ratios
Ratio name
Average
Ratio explanation (common business practice)
Current ratio
2.66
The best current ratio is between 1.2 to 2. A current ratio below 1.2 means that the company doesn’t have enough liquid assets to cover its short-term liabilities or a company is just able to cover all of its short-term obligations. A ratio higher than 2 may indicate that the company is not investing its assets efficiently.
Quick ratio
2.62
The ideal quick ratio is right around 1. This means a company has enough current assets to cover its existing near-term debt. A higher ratio is safer than a lower one because of the excess cash. A low quick ratio indicates that a company doesn't have adequate current assets, without inventory, to cover near-term debt.
Cash ratio
2.13
A ratio of not lower than 0.5 to 1 is usually preferred. If a ratio is > 1, it means that company is not using its capital for its best use. Although creditors prefer a high cash ratio as it indicates that the company can easily pay off its debt.
Working capital
92 894.50
An indicator should be > 0. Negative indicator means assets aren’t being used effectively, and threre may be liquidity crisis. Excessive working capital refers to the position where when the level of current assets is much higher to meet current liabilities.
Working capital ratio
2.66
Generally, a working capital ratio of less than 1 is taken as indicative of potential future liquidity problems. If a ratio is 1.5-2, it means that a company on solid financial ground in terms of liquidity. If a ratio is > 2, a company is not doing a good job of employing its assets to generate maximum possible revenue.
201520162017201800.751.52.253
  • Current ratio
  • Quick ratio
  • Cash ratio
Assets management ratios
Ratio name
Average
Ratio explanation (common business practice)
Inventory turnover
14.02
Low turnover implies weak sales and possibly excess inventory, also known as overstocking. It may indicate a problem with the goods being offered for sale or be a result of too little marketing. A high ratio implies either strong sales or insufficient inventory, which leads to lost business.
Days inventory
26.42
Days sales of inventory is a measure of how long it takes a company to sell off inventory. Decreases in DSI means that a company is selling products much more quickly or is acquiring inventory too slowly. Increases in DSI generally suggest sales are slowing down or the company is buying too much inventory.
Receivables turnover
4.67
A high receivables turnover ratio can imply the followings: 1. a company operates on a cash basis. 2. efficient collection of accounts receivable. 3. conservative credit policy. A low ratio can suggest a few things: 1. poor collecting processes. 2. bad credit policy or none at all 3. bad customers or customers with financial difficulty.
Days Receivables
78.85
There is not an absolute number of accounts receivable days that is considered to represent excellent or poor accounts receivable management, since the figure varies considerably by industry and the underlying payment terms. An effective way to use the accounts receivable days measurement is to track it on a trend line.
Fixed assets turnover
4.78
Optimal ratio is at least 2, better when it's higher, which indicates that a company has more effectively utilized investment in FA. An increasing trend in fixed assets turnover ratio is desirable. A declining trend in fixed asset turnover may mean that the company is over investing in the property, plant and equipment.
Total assets turnover
0.45
Generally, a higher ratio is favored because there is an implication that the company is efficient in generating sales or revenues. A lower ratio illustrates that a company is not using the assets efficiently and has internal problems.
20152016201720180481216
  • Inventory turnover
  • Receivables turnover
  • Fixed assets Turnover
  • Total assets turnover
Debt management ratios
Ratio name
Average
Ratio explanation (common business practice)
Debt to assets ratio
0.62
If the ratio is > 0.5, most of the assets are financed through equity. If the ratio is > 0.5, most of the assets are financed through debt. Whether or not a debt ratio is good depends on the context within which it is being analyzed. From a pure risk perspective, lower ratios (0.4 or lower) are considered better debt ratios.
Debt to equity ratio
1.71
The optimal debt to equity (D/E) ratio will tend to vary widely by industry, but the general consensus is that it should not be > 2.0. Companies with a higher debt to equity ratio are considered more risky to creditors and investors than companies with a lower ratio.
Long-term debt to equity ratio
1.02
A high ratio usually indicates a higher degree of business risk because the company must meet principal and interest on its obligations. If a ratio is < 0.5, a company is attractive from investment viewpoint, else if a ratio is 0.5-1, it's satisfactory, else if a ratio is > 1, a company is defined as risky from investment viewpoint.
Debt to EBITDA ratio
3.92
Companies in normal financial state show debt/EBITDA ratio less than 3. Ratios higher than 4 or 5 usually set off alarms causes concern for rating agencies, investors, creditors as it indicates that a company is likely to face difficulties in handling its debt burden, so there could be problems to raise additional loans.
Assets to equity ratio
2.71
The higher the ratio is, the greater the firm's debt. There is no ideal ratio to aim for, as all firms have a different tolerance for debt. A low ratio indicates that a business has been financed in a conservative manner. A high asset to equity ratio can indicate that a business can no longer access additional debt financing.
201520162017201802468
  • Debt to assets ratio
  • Debt to equity ratio
  • Debt to EBITDA ratio
  • Assets to equity ratio
Profitability ratios
Ratio name
Average
Ratio explanation (common business practice)
Gross profit margin
0.65
A ratio tells how good a company is at creating a product or providing a service compared to its competitors. The higher the gross profit margin percentage, the more funds are available to reinvest, save and/or pay expenses. Trend lines in gross margin are equally important, because they indicate potential problems.
EBITDA Margin
0.36
The EBITDA margin figure is helpful in comparing the profitability of different companies while factoring out the effects of decisions related to financing and accounting. Normal EBITDA margin may be in range from 10% to 50% depending on industry.
Operating profit margin
0.27
Operating Profit Margin often differs across companies and industries and is often used as a metric for benchmarking one company against similar companies within the same industry, because some industries have higher labor or materials costs than others.
Net profit margin
0.19
A ratio represents how much profit each dollar of sales generates. Companies that can expand their net margins over time are generally rewarded with share price growth. Generally, a net profit margin in excess of 10% is considered excellent, though it depends on the industry and the structure of the business.
Return on assets
0.09
The profit percentage of assets varies by industry, but in general, the higher ROA indicates more asset efficiency. For this reason it is often more effective to compare a company's ROA to that of other companies in the same industry or against its own ROA figures from previous periods. Falling ROA is almost always a problem.
Return on equity
0.23
ROE is expressed as a percentage and can be calculated for any company if net income and equity are both positive numbers. ROE is especially used for comparing the performance of companies in the same industry. ROEs of 15-20% are generally considered good.
201520162017201800.20.40.60.8
  • Gross profit margin
  • EBITDA margin
  • Operating profit margin
  • Net profit margin
Analysis Summary of
According to vertical analysis of Statement of income: For 2016 period Gross profit accounted for 64.04 %, Results from operating activities (EBIT) - for 28.61 %, Profit before tax (EBT) - for 28.13 % and Net profit - for 22.53 % from Net revenue of the Company. For 2017 period Gross profit accounted for 64.52 %, Results from operating activities (EBIT) - for 30.06 %, Profit before tax (EBT) - for 30.96 % and Net profit - for 26.39 % from Net revenue of the Company. For 2018 period Gross profit accounted for 65.25 %, Results from operating activities (EBIT) - for 31.77 %, Profit before tax (EBT) - for 33.05 % and Net profit - for 15.02 % from Net revenue of the Company.
Due to horizontal analysis for 2015 / 2016 period Net profit for the year showed the maximum growth by 68.45 % and Interest and other income, net changed by -226.88 %, which is the minimum percent change. for 2016 / 2017 period Net profit for the year showed the maximum growth by 24.10 % and Interest and other income, net changed by -299.54 %, which is the minimum percent change. for 2017 / 2018 period Tax expenses (provision) showed the maximum growth by 351.11 % and Net profit for the year changed by -34.99 %, which is the minimum percent change.
According to horizontal analysis for 2015 / 2016 period Short-term debt showed the maximum growth by 158.86 % and Retained earnings changed by -74.91 %, which is the minimum percent change. for 2016 / 2017 period Retained earnings showed the maximum growth by 678.66 % and Other equity changed by -59.21 %, which is the minimum percent change. for 2017 / 2018 period Other non-current liabilities showed the maximum growth by 47.48 % and Other equity changed by -448.80 %, which is the minimum percent change.
Average current ratio of the Company is 2.66 for the analyzed period, which means that the company has optimal liquid position.
Working capital of the Company is a positive figure, which means that the Company can fully cover its short-term liabilities as they come due in the next 12 months.
Average debt to EBITDA ratio of the Company is near the risky level of 4-5 which indicates possible problems in handling company's debt burden.
For analyzed period average gross profit margin of the Company equivalent to 64.63%, average EBITDA margin - 35.87%, average operating profit margin - 27.46%, average net profit margin - 19.24%.