2026-06-18 10:10 UTC
Open a short position on MSFT due to a confirmed technical breakdown below support, with macro evidence permitting the trade.
Open a short position on MSFT due to a confirmed technical breakdown below support, with macro evidence permitting the trade.
The technical analysis indicates a strong bearish breakdown below a key support level with high volume, suggesting further downside potential. Although Microsoft's macro fundamentals are strong, they are neutral in directional bias and do not contradict the bearish technical setup. Thus, the technical breakdown is the primary driver for this decision, with macro evidence permitting the trade.
Microsoft exhibits strong financial health with high profitability and liquidity.
N/A
Monitor changes in debt levels and interest coverage to assess financial risk.
Macro analysis 10 claims Open analysis Close analysis
The company's strong profitability and liquidity metrics suggest resilience and operational efficiency, which are crucial for sustaining growth and shareholder value. However, the moderate leverage indicates some financial risk that needs monitoring.
- High gross margin indicating efficient cost management.
- Strong operating margin reflecting effective operational control.
- Robust current ratio suggesting good short-term financial health.
- Moderate debt-to-equity ratio indicating some leverage risk.
- Debt-to-assets ratio showing a moderate level of asset-backed debt.
Evidence report 10 claims Open evidence
Microsoft has a high gross margin of 67.6%, indicating efficient cost management.
- Formula
- gross_profit_on_sales / sales_revenues * 100
- Input
- gross_profit_on_sales=56060000000.0, sales_revenues=82900000000.0
- Calculation
- 56060000000.0 / 82900000000.0 * 100
- Value
- 67.6%
Microsoft's operating margin is 46.3%, reflecting effective operational control.
- Formula
- operating_profit / sales_revenues * 100
- Input
- operating_profit=38400000000.0, sales_revenues=82900000000.0
- Calculation
- 38400000000.0 / 82900000000.0 * 100
- Value
- 46.3%
Microsoft's net margin is 38.3%, indicating strong profitability.
- Formula
- net_income / sales_revenues * 100
- Input
- net_income=31780000000.0, sales_revenues=82900000000.0
- Calculation
- 31780000000.0 / 82900000000.0 * 100
- Value
- 38.3%
Microsoft's EBITDA margin is 58.6%, showing strong earnings before interest, taxes, depreciation, and amortization.
- Formula
- ebitda / sales_revenues * 100
- Input
- ebitda=48570000000.0, sales_revenues=82900000000.0
- Calculation
- 48570000000.0 / 82900000000.0 * 100
- Value
- 58.6%
Microsoft's current ratio is 1.28, indicating good short-term financial health.
- Formula
- current_assets / current_liabilities
- Input
- current_assets=175330000000.0, current_liabilities=136660000000.0
- Calculation
- 175330000000.0 / 136660000000.0
- Value
- 1.28
Microsoft's cash-to-debt ratio is 0.31, indicating moderate liquidity relative to debt.
- Formula
- cash_and_equivalent / debt
- Input
- cash_and_equivalent=32110000000.0, debt=103190000000.0
- Calculation
- 32110000000.0 / 103190000000.0
- Value
- 0.31
Microsoft's debt-to-equity ratio is 0.25, indicating moderate leverage.
- Formula
- debt / equity_capital_and_reserves
- Input
- debt=103190000000.0, equity_capital_and_reserves=414370000000.0
- Calculation
- 103190000000.0 / 414370000000.0
- Value
- 0.25
Microsoft's debt-to-assets ratio is 14.9%, indicating a moderate level of asset-backed debt.
- Formula
- debt / assets * 100
- Input
- debt=103190000000.0, assets=694230000000.0
- Calculation
- 103190000000.0 / 694230000000.0 * 100
- Value
- 14.9%
Microsoft's interest coverage ratio is 49.36, indicating strong ability to cover interest expenses.
- Formula
- ebit / interest_expense_on_debt
- Input
- ebit=38400000000.0, interest_expense_on_debt=778000000.0
- Calculation
- 38400000000.0 / 778000000.0
- Value
- 49.36
Microsoft's net cash position is -71.08B, indicating more debt than cash.
- Formula
- cash_and_equivalent - debt
- Input
- cash_and_equivalent=32110000000.0, debt=103190000000.0
- Calculation
- 32110000000.0 - 103190000000.0
- Value
- -71.08B
Data gaps 3 Open gaps
PE does not align with stock price divided by EPS.
If EPS is directly comparable with stock price, price/EPS should be close to PE. A large mismatch may mean period mismatch, TTM vs quarterly data, or extraction inconsistency. IMPORTANT WARNINGMarket capitalization appears scale-inconsistent.
market cap 286.0 is less than 5% of assets 694230000000.0 market cap 286.0 is less than 5% of sales 82900000000.0 raw value looks unscaled, e.g. 'USD 455' with no B/M suffix IMPORTANT WARNINGDividend yield has ambiguous unit/format.
Yield may be a percent, fraction, or display value; without explicit unit it should not drive the thesis. USE WITH CAUTIONMicrosoft's financials demonstrate strong profitability and liquidity, supported by high margins and a solid current ratio, though moderate leverage suggests some financial risk.
Stock supportive evidence 6 Open evidence
Microsoft has a high gross margin of 67.6%, indicating efficient cost management.
A high gross margin indicates that Microsoft efficiently manages its production costs relative to its sales.Microsoft's operating margin is 46.3%, reflecting effective operational control.
A strong operating margin suggests that Microsoft is effectively controlling its operating expenses relative to its revenue.Microsoft's net margin is 38.3%, indicating strong profitability.
A high net margin indicates that Microsoft retains a significant portion of its revenue as profit.Microsoft's EBITDA margin is 58.6%, showing strong earnings before interest, taxes, depreciation, and amortization.
A high EBITDA margin indicates strong operational profitability before accounting for non-operating expenses.Microsoft's current ratio is 1.28, indicating good short-term financial health.
A current ratio above 1 indicates that Microsoft has more current assets than current liabilities, suggesting good liquidity.Microsoft's interest coverage ratio is 49.36, indicating strong ability to cover interest expenses.
A high interest coverage ratio indicates that Microsoft can comfortably meet its interest obligations from its earnings.Stock caution evidence 4 Open caution
Microsoft's cash-to-debt ratio is 0.31, indicating moderate liquidity relative to debt.
A cash-to-debt ratio of 0.31 suggests that Microsoft has a moderate level of cash relative to its debt obligations.Microsoft's debt-to-equity ratio is 0.25, indicating moderate leverage.
A debt-to-equity ratio of 0.25 indicates that Microsoft uses a moderate amount of debt financing relative to its equity.Microsoft's debt-to-assets ratio is 14.9%, indicating a moderate level of asset-backed debt.
A debt-to-assets ratio of 14.9% suggests that a moderate portion of Microsoft's assets are financed through debt.Microsoft's net cash position is -71.08B, indicating more debt than cash.
A negative net cash position indicates that Microsoft has more debt than cash, which could be a concern if liquidity tightens.