An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

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)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	—)	—)	—)	—)	—)	—)
Total assets (adjusted)	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Adjustment to Total Debt
Total debt (as reported)	78,775)	64,304)	64,683)	70,687)	72,823)	78,752)
Add: Operating lease liability (before adoption of FASB Topic 842)²	—)	—)	—)	—)	—)	—)
Add: Operating lease liabilities (included in Other current liabilities)	3,580)	2,409)	2,228)	1,962)	1,616)	1,515)
Add: Long-term operating lease liabilities	15,497)	12,728)	11,489)	9,629)	7,671)	6,188)
Total debt (adjusted)	97,852)	79,441)	78,400)	82,278)	82,110)	86,455)

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).

^{1, 2} Equal to total present value of future operating lease payments.

Microsoft Corp., Financial Data: Reported vs. Adjusted

Download chart

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 Turnover¹
Reported total asset turnover	0.48	0.51	0.54	0.50	0.47	0.44
Adjusted total asset turnover	0.48	0.51	0.54	0.50	0.47	0.44
Debt to Equity²
Reported debt to equity	0.29	0.31	0.39	0.50	0.62	0.77
Adjusted debt to equity	0.36	0.39	0.47	0.58	0.69	0.84
Return on Assets³ (ROA)
Reported ROA	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%
Adjusted ROA	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%

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).

¹ See details »

² See details »

³ See details »

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 and from 2023 to 2024.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Microsoft Corp. adjusted debt to equity ratio improved from 2022 to 2023 and 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 and from 2023 to 2024.

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

Download chart

	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 Operating Leases
Selected Financial Data (US$ in millions)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Adjusted total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Activity Ratio
Adjusted total asset turnover²	0.48	0.51	0.54	0.50	0.47	0.44

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 ÷ 512,163 = 0.48

Download chart

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 and 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 debt	78,775)	64,304)	64,683)	70,687)	72,823)	78,752)
Stockholders’ equity	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Solvency Ratio
Debt to equity¹	0.29	0.31	0.39	0.50	0.62	0.77
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	97,852)	79,441)	78,400)	82,278)	82,110)	86,455)
Stockholders’ equity	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Solvency Ratio
Adjusted debt to equity²	0.36	0.39	0.47	0.58	0.69	0.84

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 Debt to equity = Total debt ÷ Stockholders’ equity
= 78,775 ÷ 268,477 = 0.29

² Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity
= 97,852 ÷ 268,477 = 0.36

Download chart

Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Microsoft Corp. adjusted debt-to-equity ratio improved from 2022 to 2023 and 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 Operating Leases
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Adjusted total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Profitability Ratio
Adjusted ROA²	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%

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 ÷ 512,163 = 17.21%

Download chart

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 and from 2023 to 2024.

Microsoft Corp. (NASDAQ:MSFT)

Analysis of Operating Leases

Adjustments to Financial Statements for Operating Leases

Microsoft Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios for Operating Leases (Summary)

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)