Aureus
BGood

Microsoft Corporation(MSFT)

B

Financial data as of Jun 30, 2026Declining · Technology

FCF Margin16.4%Free Cash Flow / Revenue
Cash Conversion136.8%Operating CF / Net Income
Free Cash Flow$67.0B
Revenue$331.8B
Net Cash-$35.9BNet debt position
Debt / FCF1.0xManageable debt load
Current Ratio1.23Adequate short-term liquidity
YoY FCF Growth-26.6%5 of 5 quarters positive

How This Grade Was Calculated

Base grade from FCF margin, adjusted by financial health factors

BaseC
→
+0.5Healthy FCF margin with manageable debt (16.4%, 1.0x)
→
-1Significant YoY FCF decline (-26.6%)
→
+1Very low debt-to-FCF ratio (1.0x)
→
+0.25Solid revenue growth (17.7% YoY)
→
FinalB

Analysis Summary

Strengths

  • Strong FCF margin (16.4%)
  • Excellent cash conversion (137%)
  • Very low debt relative to cash flow (1.0x)

Concerns

  • Net debt position ($35.9B) — 1.0x FCF, manageable
  • Significant YoY FCF decline (-26.6%)
SBC-adjusted FCF used — $12.4B stock-based compensation (19% of reported FCF) subtracted

Financial Breakdown

Key financials compared side by side

Margin Composition

FCF Margin16.4%
Net Margin40.3%
Operating CF Margin55.1%
CapEx Ratio34.9%

Balance Sheet Health

Debt, liquidity, and leverage snapshot

Net Cash-$35.9BNet debt position
Debt / FCF1.0xManageable debt load
Current Ratio1.23Adequate liquidity
Debt / Equity0.13Low leverage

Quarterly FCF Trend

-26.6% YoYDeclining (-26.6%)

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$67.0B
Revenue$331.8B
Net Income$133.7B
Operating Cash Flow$182.9B
Capital Expenditure$115.9B
FCF Margin16.4%
Cash Conversion Rate136.8%
Net Margin40.3%
Total Debt$56.8B
Total Cash$20.9B
Net Cash-$35.9B
Current Ratio1.23
Debt / Equity0.13
Debt / FCF1.0x
YoY FCF Growth-26.6%
Positive Quarters5 of 5
Trend DirectionDeclining
Report DateJun 30, 2026
GradeB
Data SourceYahoo Finance

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