Aureus
AExcellent

Microsoft Corporation(MSFT)

A

Financial data as of Jun 30, 2025Declining · Technology

FCF Margin21.2%Free Cash Flow / Revenue
Cash Conversion133.7%Operating CF / Net Income
Free Cash Flow$71.6B
Revenue$281.7B
Net Cash-$30.3BNet debt position
Debt / FCF1.0xManageable debt load
Current Ratio1.35Adequate short-term liquidity
YoY FCF Growth-26.5%5 of 5 quarters positive

How This Grade Was Calculated

Base grade from FCF margin, adjusted by financial health factors

BaseB
→
+0.5Healthy FCF margin with manageable debt (21.2%, 1.0x)
→
-1Significant YoY FCF decline (-26.5%)
→
+1Very low debt-to-FCF ratio (1.0x)
→
FinalA

Analysis Summary

Strengths

  • Exceptional FCF margin (21.2%)
  • Excellent cash conversion (134%)
  • Very low debt relative to cash flow (1.0x)

Concerns

  • Net debt position ($30.3B) — 1.0x FCF, manageable
  • Significant YoY FCF decline (-26.5%)
SBC-adjusted FCF used — $12.0B stock-based compensation (17% of reported FCF) subtracted

Financial Breakdown

Key financials compared side by side

Margin Composition

FCF Margin21.2%
Net Margin36.1%
Operating CF Margin48.3%
CapEx Ratio22.9%

Balance Sheet Health

Debt, liquidity, and leverage snapshot

Net Cash-$30.3BNet debt position
Debt / FCF1.0xManageable debt load
Current Ratio1.35Adequate liquidity
Debt / Equity0.18Low leverage

Quarterly FCF Trend

-26.5% YoYDeclining (-26.5%)

Free cash flow per quarter

Sector Comparison — Technology

FCF Margin ranked against sector peers

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Detailed Metrics

Company NameMicrosoft Corporation
SectorTechnology
Free Cash Flow$71.6B
Revenue$281.7B
Net Income$101.8B
Operating Cash Flow$136.2B
Capital Expenditure$64.6B
FCF Margin21.2%
Cash Conversion Rate133.7%
Net Margin36.1%
Total Debt$60.6B
Total Cash$30.2B
Net Cash-$30.3B
Current Ratio1.35
Debt / Equity0.18
Debt / FCF1.0x
YoY FCF Growth-26.5%
Positive Quarters5 of 5
Trend DirectionDeclining
Report DateJun 30, 2025
GradeA
Data SourceYahoo Finance

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