Is the business good?
How good a business is MSFT?
Microsoft Corporation earns 30% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
30%
Return on invested capital · cost of capital 9.0% · 21 points above what the capital costs: growth creates value
- Operating margin
- 47%
Operating margin · Software - Infrastructure median 6.1% · 12 months to Q4 2026
- Cash conversion
- 0.50×
Cash conversion · 0.70× a year ago · some of the reported profit has not turned into cash yet
- R&D as % of revenue
- 11%
R&D as % of revenue
| Year | Operating margin |
|---|---|
| FY2021 | 42% |
| FY2022 | 42% |
| FY2023 | 42% |
| FY2024 | 45% |
| FY2025 | 46% |
| FY2026 | 47% |
Details›
- Gross margin12 months to Q4 2026
- 68%
- Operating margin12 months to Q4 2026
- 47%
- Net margin12 months to Q4 2026
- 40%
- Free cash flow margin
- 20%
- R&D as % of revenue
- 11%
- Revenue, trailing twelve months
- $331.8B
- Free cash flow, trailing twelve months
- $67.0B
- Net income, trailing twelve months
- $133.7B
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 30%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion from the cash flow statement.
Software - Infrastructure
Ranks #9 of 78 by Smart Score