Microsoft Corporation — Earnings Quality Grade C
MSFT · Technology
Some red flags
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 91 days, change +6 days YoY
AR outpaced revenue for 2 consecutive years
Revenue 14.9%, CFFO 14.9%. Cash follows revenue
Expense Quality
Inventory -24.7% vs COGS 18.5%. Normal
CapEx growth 45.1% is >2x revenue growth 14.9%
SG&A/Gross Profit = 17.0%, excellent (<30%)
Gross margin 68.8%, change -0.9pp. Stable
Cash Flow Quality
CFFO/NI = 1.34. Profits backed by cash
FCF $71.6B, FCF/NI = 0.70
Accruals ratio = -5.5%. Low accruals
Cash $94.6B covers debt $60.6B
Balance Sheet Health
Goodwill+Intangibles $142.1B = 41% of equity
Debt/EBITDA = 0.4x. Healthy
Other assets 11.3% vs revenue 14.9%. Normal
Write-offs up 358% YoY
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change -3% YoY. Normal
Manipulation Score
M-Score = -2.56 (< -2.22). Unlikely manipulator
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-08