Microsoft (MSFT) – A Case Study in Company Risk

In 1990, Microsoft was a “safe” company. Today it is very risky:

From 1985 to 1990, its revenues had increased by 851%. However, since 2013 they have only increased by 43%.
In 1990, its debts were 17% of its revenues, but today debts are 49% greater than revenues.
In 1990, its Price to Sales ratio was 5.84, which was already very high. Microsoft’s current Price to Sales ratio, however, is a more excessive 6.68.

Date Revenues Liabilities Market Cap Dividends (TTM) Net Income Interest Expense (TTM) Shares Outstanding PE Ratio
12/31/1990 $1,478 $248 $8,623 $0 $356 $0 8,250.1 24.2
12/31/1995 $7,419 $2,801 $50,938 $0 $1,838 $0 9,504.1 27.7
12/31/2000 $23,776 $11,269 $231,290 $0 $9,624 $0 10,642.0 24.0
12/31/2005 $41,359 $23,049 $278,358 $3,447 $13,057 $0 10,384.0 21.3
12/31/2010 $66,690 $43,825 $234,528 $4,750 $20,568 $177 8,403.0 11.4
12/31/2015 $88,084 $103,318 $439,679 $10,371 $11,710 $1,016 7.925.0 37.5
12/21/2018 $114,906 $171,652 $768,082 $12,916 $18,819 $2,735 7,676.2 40.8
Date Debt to Revenue Price to Sales Interest Exp. as % of Net Income Interest Exp. as % of Revenue Dividends as % of Net Income Dividends as % of Revenue Dividends + Interest Exp. as % of Net Income Dividends + Interest Exp. as % of Revenue Net Income as % of Revenue
12/31/1990 16.7% 5.84 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 24.1%
12/31/1995 37.8% 6.87 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 24.8%
12/31/2000 47.4% 9.73 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 40.5%
12/31/2005 55.7% 6.73 0.0% 0.0% 26.4% 8.3% 26.4% 8.3% 31.6%
12/31/2010 65.7% 3.52 0.9% 0.3% 23.1% 7.1% 24.0% 7.4% 30.8%
12/31/2015 117.3% 4.99 8.7% 1.2% 88.6% 11.8% 97.2% 12.9% 13.3%
12/21/2018 149.4% 6.68 14.5% 2.4% 68.6% 11.2% 83.2% 13.6% 16.4%
Date 5Y Revenue Growth
5Y Liabilities Growth
3Y Increase in Liabs as % of Dividends Paid 3Y Increase in Liabs as % of Divs + Buybacks
12/31/1990 850.9%
12/31/1995 402.1% 1,031.7%
12/31/2000 220.5% 302.3%
12/31/2005 74.0% 104.5% 0.16 0.11
12/31/2010 61.2% 90.1% 0.80 0.24
12/31/2015 32.1% 135.8% 1.69 0.81
12/21/2018 43.0% 182.8% 2.10 1.07
By |2018-12-21T21:28:17+00:00December 21st, 2018|Measures of Risk|0 Comments