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MSFT, Microsoft Corp.

Software asset-light Capital build-out

Microsoft writes and licenses software for businesses and individuals: the productivity tools people use to write, calculate and communicate, the operating system that runs personal computers, and the server software that runs behind the scenes. It sells much of that software as a subscription and rents computing power and storage from its own datacenters. Buyers range from one person paying for an email account to the largest enterprises running their operations on its cloud.

Microsoft is a technology company committed to making digital technology and artificial intelligence ("AI") available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

We create platforms and tools, powered by AI, that deliver innovative solutions that meet the evolving needs of our customers.

Latest annual: FY2025 10-K

MSFT · Microsoft Corp.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$281.7B

+14.9% YoY · 15% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $318.3B 5-yr avg $221.0B

Gross margin 68% 5-yr avg 69%

Operating margin 46.8% 5-yr avg 43.1%

ROIC 29% 5-yr avg 32%

Owner-earnings margin 44% 5-yr avg 39%

Free cash flow margin 23% 5-yr avg 30%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Productivity and Business Processes (43%), Intelligent Cloud (38%) and More Personal Computing (19%).
Situation: Capital build-out. Capital spending has surged to 23% of sales, today's earnings are charged less depreciation than tomorrow's will be.
What moves the needle: The test is whether the work an organization builds on these tools becomes too costly to move — the files, identities, code and habits that quietly lock a customer in — and whether that lock lets the company set prices without losing the account; what the margins say sits in the record below. Renting computing is a separate test: whether it can secure permitted land, predictable power and servers at a scale few rivals can match, while the filing itself calls the industry one of frequent change in technology and business model, so a lead is never a deed. Watch, too, that the cloud's hunger for land and energy, and the tax authority's claims against it, do not turn an asset-light business into a heavy, contested one. The figures that decide all this are below.
Is it a good business?: Return on capital has run high across the record (median 28%, above 15% in 9 of 10 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 36% of revenue reaches owners as cash, consistently, and customers and suppliers fund the business through negative working capital. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.

Where the money comes from

read the 10-K →

The biggest segment, Productivity And Business Processes, is also where the profit is made: 43% of revenue and 54% of segment operating profit.

Revenue by reportable segment, FY2025

Operating profit same segments

Productivity And Business Processes43%$120.8B54% of profit
Intelligent Cloud38%$106.3B35% of profit
More Personal Computing19%$54.6B11% of profit

By geographyUnited States51%International49%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$91.2B	$96.6B	$110.4B	$125.8B	$143.0B	$168.1B	$198.3B	$211.9B	$245.1B	$281.7B	$318.3B	RevenueRevenue
64%	65%	65%	66%	68%	69%	68%	69%	70%	69%	68%	Gross marginGross mgn
5%	5%	4%	4%	4%	3%	3%	4%	3%	3%	2%	SG&A / revenueSG&A/rev
13%	13%	13%	13%	13%	12%	12%	13%	12%	12%	11%	R&D / revenueR&D/rev
$26.1B	$29.0B	$35.1B	$43.0B	$53.0B	$69.9B	$83.4B	$88.5B	$109.4B	$128.5B	$149.0B	Operating incomeOp. inc.
28.6%	30.1%	31.8%	34.1%	37.0%	41.6%	42.1%	41.8%	44.6%	45.6%	46.8%	Operating marginOp. mgn
$20.5B	$25.5B	$16.6B	$39.2B	$44.3B	$61.3B	$72.7B	$72.4B	$88.1B	$101.8B	$125.2B	Net incomeNet inc.
20%	15%	55%	10%	17%	14%	13%	19%	18%	18%	19%	Effective tax rateTax rate
											Cash flow & returns
$33.3B	$39.5B	$43.9B	$52.2B	$60.7B	$76.7B	$89.0B	$87.6B	$118.5B	$136.2B	$170.1B	Operating cash flowOp. cash
$4.9B	$6.1B	$7.7B	$9.7B	$10.7B	$9.3B	$12.6B	$11.0B	$15.2B	$22.0B	$30.3B	DepreciationDeprec.
$5.2B	$4.7B	$15.7B	($1.4B)	$405M	$51M	($3.8B)	($5.4B)	$4.5B	$356M	$2.3B	Working capital & otherWC & other
$8.3B	$8.1B	$11.6B	$13.9B	$15.4B	$20.6B	$23.9B	$28.1B	$44.5B	$64.6B	$97.2B	CapexCapex
9.2%	8.4%	10.5%	11.1%	10.8%	12.3%	12.0%	13.3%	18.1%	22.9%	30.5%	Capex / revenueCapex/rev
$28.4B	$33.4B	$36.2B	$42.5B	$50.0B	$67.4B	$76.4B	$76.6B	$103.3B	$114.2B	$139.8B	Owner earningsOwner earn.
31.2%	34.6%	32.8%	33.8%	34.9%	40.1%	38.6%	36.1%	42.2%	40.5%	43.9%	Owner earnings marginOE mgn
$25.0B	$31.4B	$32.3B	$38.3B	$45.2B	$56.1B	$65.1B	$59.5B	$74.1B	$71.6B	$72.9B	Free cash flowFCF
27.4%	32.5%	29.2%	30.4%	31.6%	33.4%	32.9%	28.1%	30.2%	25.4%	22.9%	Free cash flow marginFCF mgn
$11.0B	$11.8B	$12.7B	$13.8B	$15.1B	$16.5B	$18.1B	$19.8B	$21.8B	$24.1B	$25.9B	Dividends paidDiv. paid
$16.0B	$11.8B	$10.7B	$19.5B	$23.0B	$27.4B	$32.7B	$22.2B	$17.3B	$18.4B	—	BuybacksBuybacks
18%	16%	12%	24%	26%	32%	36%	33%	30%	30%	29%	ROICROIC
25%	29%	20%	38%	37%	43%	44%	35%	33%	30%	30%	Return on equityROE
11%	16%	5%	25%	25%	32%	33%	25%	25%	23%	24%	Retained to equityRetained/eq
											Balance sheet
$113.2B	$133.0B	$133.8B	$133.8B	$136.5B	$130.3B	$104.8B	$111.3B	$75.5B	$94.6B	$78.3B	Cash & investmentsCash+inv
$18.3B	$22.4B	$26.5B	$29.5B	$32.0B	$38.0B	$44.3B	$48.7B	$56.9B	$69.9B	$60.0B	ReceivablesReceiv.
$2.3B	$2.2B	$2.7B	$2.1B	$1.9B	$2.6B	$3.7B	$2.5B	$1.2B	$938M	$1.2B	InventoryInvent.
$6.9B	$7.4B	$8.6B	$9.4B	$12.5B	$15.2B	$19.0B	$18.1B	$22.0B	$27.7B	$37.5B	Accounts payablePayables
$13.6B	$17.2B	$20.5B	$22.2B	$21.4B	$25.5B	$29.0B	$33.1B	$36.2B	$43.1B	$23.7B	Operating working capitalOper. WC
$139.7B	$162.7B	$169.7B	$175.6B	$181.9B	$184.4B	$169.7B	$184.3B	$159.7B	$191.1B	$175.3B	Current assetsCur. assets
$59.4B	$55.7B	$58.5B	$69.4B	$72.3B	$88.7B	$95.1B	$104.1B	$125.3B	$141.2B	$136.7B	Current liabilitiesCur. liab.
2.4×	2.9×	2.9×	2.5×	2.5×	2.1×	1.8×	1.8×	1.3×	1.4×	1.3×	Current ratioCurr. ratio
$17.9B	$35.1B	$35.7B	$42.0B	$43.4B	$49.7B	$67.5B	$67.9B	$119.2B	$119.5B	$119.7B	GoodwillGoodwill
$193.5B	$250.3B	$258.8B	$286.6B	$301.3B	$333.8B	$364.8B	$412.0B	$512.2B	$619.0B	$694.2B	Total assetsAssets
$40.6B	$77.1B	$76.2B	$72.2B	$63.3B	$58.1B	$49.8B	$47.2B	$44.9B	$43.2B	$40.3B	Total debtDebt
($72.7B)	($55.9B)	($57.5B)	($61.6B)	($73.2B)	($72.2B)	($55.0B)	($64.0B)	($30.6B)	($51.4B)	($38.0B)	Net debt / (cash)Net debt
21.0×	13.1×	12.8×	16.0×	20.4×	29.8×	40.4×	45.0×	37.3×	53.9×	52.7×	Interest coverageInt. cov.
$83.1B	$87.7B	$82.7B	$102.3B	$118.3B	$142.0B	$166.5B	$206.2B	$268.5B	$343.5B	$414.4B	Shareholders’ equityEquity
2.9%	3.4%	3.6%	3.7%	3.7%	3.6%	3.8%	4.5%	4.4%	4.3%	3.9%	Stock comp / revenueSBC/rev
											Per share
8.01B	7.83B	7.79B	7.75B	7.68B	7.61B	7.54B	7.47B	7.47B	7.46B	7.46B	Shares out (diluted)Shares
$11.38	$12.33	$14.16	$16.23	$18.61	$22.09	$26.30	$28.36	$32.82	$37.74	$42.68	Revenue / shareRev/sh
$2.56	$3.25	$2.13	$5.06	$5.76	$8.05	$9.65	$9.68	$11.80	$13.64	$16.79	EPS (diluted)EPS
$3.55	$4.27	$4.64	$5.48	$6.50	$8.86	$10.14	$10.25	$13.84	$15.29	$18.75	Owner earnings / shareOE/sh
$3.12	$4.01	$4.14	$4.93	$5.89	$7.38	$8.64	$7.96	$9.92	$9.59	$9.78	Free cash flow / shareFCF/sh
$1.37	$1.51	$1.63	$1.78	$1.97	$2.17	$2.41	$2.65	$2.91	$3.23	$3.47	Dividends / shareDiv/sh
$1.04	$1.04	$1.49	$1.80	$2.01	$2.71	$3.17	$3.76	$5.95	$8.65	$13.04	Cap. spending / shareCapex/sh
$10.37	$11.20	$10.61	$13.20	$15.40	$18.66	$22.09	$27.60	$35.95	$46.01	$55.57	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+14.3%/yr	+15.2%/yr
Owner earnings / share	+17.6%/yr	+18.6%/yr
EPS	+20.4%/yr	+18.8%/yr
Dividends / share	+10.0%/yr	+10.4%/yr
Capital spending / share	+26.5%/yr	+33.9%/yr
Book value / share	+18.0%/yr	+24.5%/yr

The year, in the company's words

the filing →

Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.

Operating income+17.4%
“Operating income increased $10.1 billion or 17%. • Cost of revenue increased $2.8 billion or 14% driven by growth in Microsoft 365 Commercial cloud. • Gross margin increased $11.2 billion or 13% driven by growth in Microsoft 365 Commercial cloud.”
✓ figure matches the filed record
Productivity And Business Processes+13.1%
“Productivity and Business Processes revenue increased driven by Microsoft 365 Commercial cloud.”
✓ direction matches the filed record
More Personal Computing+7.5%
“More Personal Computing revenue increased driven by Gaming and Search and news advertising.”
✓ direction matches the filed record

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

7.5Bpeak FY2016

ROIC

30%low FY2018

Gross margin

69%low FY2016

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$114.2Bowner earningsvs.$101.8Bnet incomelow FY2016

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $114.2B of owner earnings, the operating cash left after the $22.0B it takes just to hold its position. It put $42.6B more into growth; free cash flow, after that spending, was $71.6B.

Reported net income$101.8B

Owner earnings$114.2B · 41% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$101.8B	$88.1B	$72.4B	$72.7B	$61.3B
Depreciation & amortizationnon-cash charge added back	+$22.0B	+$15.2B	+$11.0B	+$12.6B	+$9.3B
Stock-based compensationreal costnon-cash, but a real cost	+$12.0B	+$10.7B	+$9.6B	+$7.5B	+$6.1B
Working capital & othertiming of cash in and out, other non-cash items	+$356M	+$4.5B	−$5.4B	−$3.8B	+$51M
Cash from operations	$136.2B	$118.5B	$87.6B	$89.0B	$76.7B
Maintenance capital expenditurethe spending needed just to hold position and volume	−$22.0B	−$15.2B	−$11.0B	−$12.6B	−$9.3B
Owner earnings	$114.2B	$103.3B	$76.6B	$76.4B	$67.4B
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$42.6B	−$29.3B	−$17.1B	−$11.3B	−$11.3B
Free cash flow	$71.6B	$74.1B	$59.5B	$65.1B	$56.1B
Owner-earnings marginowner earnings ÷ revenue	41%	42%	36%	39%	40%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $22.0B, roughly its depreciation, the rate its assets wear out). The other $42.6B of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $12.0B), owner earnings is nearer $102.2B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 53.9×

Comfortable

Operating income $128.5B ÷ interest expense $2.4B

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? +$51.4B

Net cash

Cash $30.2B + ST investments $64.3B − debt $43.2B

What this means
Cash and short-term investments exceed every dollar of debt by $51.4B, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -21d

Negative, funded by others

DSO 91 + DIO 4 − DPO 115 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

Return on invested capital 26%

Very high (≥25%) through the cycle

10-yr median, range 12%–36%; 30% latest = NOPAT $105.9B ÷ invested capital $356.4B

Industry peers: median 21%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 30% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 35%

High through the cycle

10-yr median margin, range 31%–42%; latest $114.2B = operating cash $136.2B − maintenance capex $22.0B

Industry peers: median 32%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 41% of revenue this year, a 35% median across 10 years. It chose to put $42.6B more into growth, so free cash flow this year was $71.6B — the gap is investment, not weakness. Treating stock comp as the real expense it is (less $12.0B of SBC) leaves $102.2B.
Are earnings backed by cash? 1.34×

Cash-backed

Cash from ops $136.2B ÷ net income $101.8B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 37%

Reinvests most of it

Dividends + buybacks $42.5B ÷ Owner Earnings $114.2B

What this means
Of $114.2B Owner Earnings, $42.5B (37%) went back to shareholders, $24.1B dividends, $18.4B buybacks. Net of $12.0B stock comp, the real buyback was about $6.4B. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 2.93×

Expanding

Capex $64.6B ÷ depreciation $22.0B

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 5 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $281.7B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.35×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Pass

Debt ≤ working capital · $43.2B vs $49.9B WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +319%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $11.77/share (latest year $13.71), the averaged base the calculator's gate runs on, and book value is $46.24/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 9 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 30% → 44% (3-yr avg ends)

In the filing’s words The filing ties gains to its own pricing, but names price competition too — pricing power that is real yet contested, not unopposed. The margin shows who is winning.

What this means
Through the cycle the operating margin widened — about 30% early to 44% lately, median 37% — pricing power intact or improving.
Reinvestment, incremental ROIC 45%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth +15%/yr

What this means
Owner earnings grew about 15% a year over the record.
Worst year 2016 · 28.6% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −0.8%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.

Does AI threaten the moat?

Elevated contestability

The product is software or information, the very thing capable AI now produces more cheaply, so the moat is more contestable than the record alone implies.

In its own filing Framed as a capability

Despite the structural exposure, the filing positions AI as something it uses, not a threat to its product.

“OVERVIEW Microsoft is a technology company committed to making digital technology and artificial intelligence ("AI") available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.”

The moat the record shows, a high return on capital held across years, was earned before AI collapsed the cost of building a capable substitute for the very thing this business sells. When a credible alternative can be assembled for a fraction of the incumbent's price, it is pricing power that erodes first, not revenue tomorrow. The live question is whether the moat survives that, not whether it held in the past. Whether that question is answerable at all is yours to decide, against your own circle of competence.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$175.3B

Cash & short-term investments$78.3B
Receivables$60.0B
Inventory$1.2B
Other current assets$35.8B

Current liabilities$136.7B

Debt due within a year$8.8B
Accounts payable$37.5B
Other current liabilities$90.3B

Current ratio1.28×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.27×stricter: inventory excluded

Cash ratio0.57×strictest: cash alone against what's due

Working capital$38.7Bthe cushion left after near-term bills

Debt due this year vs. cash$8.8B due · $78.3B cash covered by cash on hand, no refinancing forced · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+18.3%the freshest read on whether the business is still growing

Current ratio, recent quarters1.3× → 1.3×

Deeper floors

Tangible book value$275.4Bequity stripped of goodwill & intangibles

Net current asset value($104.5B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$57.0B$16.7B of it operating leases; with finance leases, “total fixed claims” below reaches $112.2B (annual-report basis)

Deferred revenue$53.7Bcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$3.0B

'27$9.3B

'28$0

'29$2.1B

'30$0

later$34.9B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$3.0Bthe first rung: what must be repaid or rolled over within the year

Within two years$12.3Bthe near wall, the part most exposed to today’s credit conditions

Biggest single year$9.3Bin 2027the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$49.2Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, Mar 31, 2026$78.3B

One year of owner earnings (FY2025)$114.2B

Together, against $3.0B due next year64.1×

Cash on hand as of Mar 31, 2026 plus a year’s owner earnings comes to $192.4B against the $3.0B due in the twelve months after the Jun 30, 2025 schedule: 64 times it.

Maturity schedule extracted from the company’s Jun 30, 2025 annual report and reconciled to the total the table states.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$11.1B

'27$10.4B

'28$8.7B

'29$6.9B

'30$6.4B

later$42.5B

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$11.1Ba fixed cash payment, owed whether or not the business has a good year

Total lease payments$86.0Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$69.0Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$43.2B

Lease obligations (present value)$69.0B

Total fixed claims on the business$112.2B

Counting the leases the way Buffett does, the fixed claims on this business come to $112.2B, of which the leases are 62%, more than the debt itself. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Jun 30, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2016–2025

Over the record, the business generated $737.6B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$239.1B · 32%
Dividends$164.8B · 22%
Buybacks$199.0B · 27%
Retained (debt / cash)$134.7B · 18%

Returned to owners$363.8B
58% of the owner earnings the business produced over the span, $164.8B as dividends and $199.0B as buybacks.
Average price paid for buybacks$170.51
Across the years where the filing reports a share count, 1167M shares were bought for $199.0B, about $170.51 each. Year to year the price paid ranged from $54.32 (2016) to $594.19 (2025); its heaviest year, 2022, paid $344.17 ($32.7B).
Net change in share count−6.9%
The diluted count fell from 8013M to 7457M, so the buybacks outran the stock issued to staff.
Dividend record$3.23/sh
Paid in 10 of the years on record, the per-share dividend growing about 10% a year. It was never cut over the span.
Return on what it retained37%
Of the earnings it kept rather than paid out ($178.7B over the span), annual owner earnings (first three years vs last three) grew $65.4B, so each retained $1 added about 0.37 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$142.1B23% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity35%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$0over 10 years buying other businesses, against $239.1B of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Pay, as filed	“Actually paid”	Owner earnings
2021	$49.9M	$139.1M	$67.4B
2022	$54.9M	$56.9M	$76.4B
2023	$48.5M	$93.2M	$76.6B
2024	$79.1M	$171.3M	$103.3B
2025	$96.5M	$131.1M	$114.2B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2025 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio480:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$12.0B
The slice of the business handed to employees in shares this year, 4% of revenue, equal to 9% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Microsoft Corp. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

None of the 6 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Acquisitions, Contingencies as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Software

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
GOOGAlphabet Inc. Class C Capital Stock	$402.8B	57%	26.4%	21%	31%
MSFTMicrosoft Corp.	$281.7B	68%	39.3%	28%	36%
METAMeta Platforms Inc.	$201.0B	82%	40.5%	25%	45%
ORCLOracle Corp.	$67.4B	97%	32.2%	16%	32%
CRMSalesforce Inc.	$41.5B	74%	3.7%	3%	22%
XYZBlock Inc.	$24.2B	34%	-0.7%	-1%	4%
ADBEAdobe Inc.	$23.8B	87%	32.2%	33%	39%
INTUIntuit Inc.	$18.8B	99%	26.0%	35%	32%
Group median	—	78%	29.3%	23%	32%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Microsoft Corp. has delivered.

Today’s price $

Through the cycle, Microsoft Corp. earns about $100.1B on its 35.5% median owner-earnings margin. This year’s 40.5% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($100.1B) Net of stock comp (−$12.4B) Steady-state · maintenance capex ($148.1B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+11%/yr

Owner-earnings growth · ’16→’25+11%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $72.9B on 7428M shares outstanding, per the 10-Q cover, as of 2026-04-23; net cash $38.0B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($97.2B) runs well above depreciation ($30.3B), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $148.1B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh MSFT against another business →

The owners of MSFT: the meeting and the votes →

Cite: Owner Scorecard, "Microsoft Corp. (MSFT), the owner's record," https://ownerscorecard.com/c/MSFT, data as of 2026-07-09.

Manual order: ← MSEX its page in the Manual MSGE →

Industry order: ← MQ the Software chapter MTC →