Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Microsoft Corp., balance sheet: goodwill and intangible assets

US$ in millions

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Goodwill	119,220)	67,886)	67,524)	49,711)	43,351)	42,026)
Marketing-related	16,500)	4,935)	4,942)	4,792)	4,158)	4,165)
Technology-based	21,913)	11,245)	11,277)	9,779)	8,160)	7,691)
Customer-related	6,038)	7,281)	7,342)	4,958)	4,967)	4,709)
Contract-based	58)	29)	16)	446)	474)	574)
Finite-lived intangible assets, gross carrying amount	44,509)	23,490)	23,577)	19,975)	17,759)	17,139)
Accumulated amortization	(16,912)	(14,124)	(12,279)	(12,175)	(10,721)	(9,389)
Finite-lived intangible assets, net carrying amount	27,597)	9,366)	11,298)	7,800)	7,038)	7,750)
Goodwill and intangible assets	146,817)	77,252)	78,822)	57,511)	50,389)	49,776)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Microsoft Corp. goodwill increased from 2022 to 2023 and from 2023 to 2024.
Finite-lived intangible assets, net carrying amount	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Microsoft Corp. finite-lived intangible assets, net carrying amount decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Microsoft Corp. goodwill and intangible assets decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.

Microsoft Corp., adjustments to financial statements

US$ in millions

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Adjustment to Total Assets
Total assets (as reported)	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Less: Goodwill	119,220)	67,886)	67,524)	49,711)	43,351)	42,026)
Total assets (adjusted)	392,943)	344,090)	297,316)	284,068)	257,960)	244,530)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Less: Goodwill	119,220)	67,886)	67,524)	49,711)	43,351)	42,026)
Stockholders’ equity (adjusted)	149,257)	138,337)	99,018)	92,277)	74,953)	60,304)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

Microsoft Corp., Financial Data: Reported vs. Adjusted

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Microsoft Corp., adjusted financial ratios

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Total Asset Turnover
Reported total asset turnover	0.48	0.51	0.54	0.50	0.47	0.44
Adjusted total asset turnover	0.62	0.62	0.67	0.59	0.55	0.51
Financial Leverage
Reported financial leverage	1.91	2.00	2.19	2.35	2.55	2.80
Adjusted financial leverage	2.63	2.49	3.00	3.08	3.44	4.05
Return on Equity (ROE)
Reported ROE	32.83%	35.09%	43.68%	43.15%	37.43%	38.35%
Adjusted ROE	59.05%	52.31%	73.46%	66.40%	59.08%	65.07%
Return on Assets (ROA)
Reported ROA	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%
Adjusted ROA	22.43%	21.03%	24.46%	21.57%	17.17%	16.05%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Microsoft Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Microsoft Corp. adjusted financial leverage ratio decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Microsoft Corp. adjusted ROE deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Microsoft Corp. adjusted ROA deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

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	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Activity Ratio
Total asset turnover¹	0.48	0.51	0.54	0.50	0.47	0.44
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Adjusted total assets	392,943)	344,090)	297,316)	284,068)	257,960)	244,530)
Activity Ratio
Adjusted total asset turnover²	0.62	0.62	0.67	0.59	0.55	0.51

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 245,122 ÷ 512,163 = 0.48

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 245,122 ÷ 392,943 = 0.62

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Microsoft Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Stockholders’ equity	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Solvency Ratio
Financial leverage¹	1.91	2.00	2.19	2.35	2.55	2.80
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	392,943)	344,090)	297,316)	284,068)	257,960)	244,530)
Adjusted stockholders’ equity	149,257)	138,337)	99,018)	92,277)	74,953)	60,304)
Solvency Ratio
Adjusted financial leverage²	2.63	2.49	3.00	3.08	3.44	4.05

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 512,163 ÷ 268,477 = 1.91

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 392,943 ÷ 149,257 = 2.63

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Microsoft Corp. adjusted financial leverage ratio decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Stockholders’ equity	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Profitability Ratio
ROE¹	32.83%	35.09%	43.68%	43.15%	37.43%	38.35%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Adjusted stockholders’ equity	149,257)	138,337)	99,018)	92,277)	74,953)	60,304)
Profitability Ratio
Adjusted ROE²	59.05%	52.31%	73.46%	66.40%	59.08%	65.07%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 88,136 ÷ 268,477 = 32.83%

² Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × 88,136 ÷ 149,257 = 59.05%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Microsoft Corp. adjusted ROE deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Profitability Ratio
ROA¹	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Adjusted total assets	392,943)	344,090)	297,316)	284,068)	257,960)	244,530)
Profitability Ratio
Adjusted ROA²	22.43%	21.03%	24.46%	21.57%	17.17%	16.05%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 88,136 ÷ 512,163 = 17.21%

² Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 88,136 ÷ 392,943 = 22.43%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Microsoft Corp. adjusted ROA deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Microsoft Corp. (NASDAQ:MSFT)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Microsoft Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)