How to Read a Balance Sheet: Microsoft's $758 Billion

A balance sheet shows what a company owns, what it owes and what is left for shareholders on one date. Microsoft's, at 30 June 2026, lists $758.4 billion of assets.

Lenders, suppliers and other creditors have a claim on $316.0 billion of them. Shareholders own the other $442.4 billion.

A balance sheet is one of the three main financial statements. It shows a company's position on one date. Our post on how to read an income statement covers profit over a period. Our post on how to read a cash flow statement covers the cash that moved.

The equation behind the sheet is assets = liabilities + equity. Assets are what the company owns. Liabilities are what it owes. Equity is the difference, which belongs to the shareholders.

Every figure comes from Microsoft's annual report, called a Form 10-K, filed with the US Securities and Exchange Commission on 29 July 2026. Its fiscal year 2026 ended on 30 June 2026.

The filing states the sheet in millions of dollars. The table shows every line as filed, for 30 June 2026 and 30 June 2025. The text below writes them in billions.

Millions of dollars, as filed. Fiscal year ended 30 June 2026. Source: Microsoft Form 10-K for fiscal year 2026

Assets come in two groups. Current assets are cash or items expected to turn into cash within a year. Everything else is non-current.

Chart 1 shows each asset line at 30 June 2026.

The chart shows property and equipment far ahead of every other line. Current assets, in blue, total $207.7 billion.

Short-term investments are securities Microsoft can sell within a year. Cash and short-term investments together were $76.8 billion, down from $94.6 billion a year earlier.

Accounts receivable were $80.9 billion. Receivables are money customers owe for products and services already delivered.

Inventories, the goods held for sale, were $1.4 billion. Other current assets nearly doubled, from $25.7 billion to $48.6 billion, up 88.9%.

Microsoft is spending heavily on it. Additions to property and equipment were $115.9 billion in fiscal year 2026.

The line is $313.1 billion, which is 41.3% of all assets, up from 33.1% a year earlier. It rose $108.1 billion in a year, or 52.7%.

Property and equipment is land, buildings and machinery. Microsoft carries it at cost less accumulated depreciation, the part of that cost already charged as an expense over each asset's life. The cost was $431.8 billion and accumulated depreciation was $118.7 billion.

Goodwill was $119.7 billion, or 15.8% of assets. Goodwill is the price paid for businesses above the value of the assets identified in them. Microsoft tests goodwill for impairment. That means checking whether it is still worth the amount on the balance sheet.

Current liabilities fall due within a year. Long-term liabilities fall due later. Chart 2 shows each line.

The chart shows short-term unearned revenue, at $73.0 billion, as the largest current liability. Other long-term liabilities, at $65.1 billion, are the largest long-term one. Total current liabilities were $168.8 billion.

Unearned revenue is cash collected for services not yet delivered. Microsoft owes the service, so the cash sits as a liability. The 10-K schedule shows $28.6 billion of the total will be counted as revenue in the three months to 30 September 2026.

Accounts payable are bills owed to suppliers. They were $42.4 billion, up 53.0%. The property and equipment note says $26.7 billion of purchases of property and equipment were still unpaid inside accounts payable at 30 June 2026, against $6.9 billion a year earlier.

Debt is the current portion of long-term debt, $9.2 billion, plus long-term debt, $31.1 billion. The two make $40.3 billion, down from $43.2 billion a year earlier.

A finance lease is a lease booked like a purchase. The asset goes into property and equipment, while the payments owed become a liability.

Other long-term liabilities were $65.1 billion. Note 13 (Leases) on page 78 of the 10-K says $62.3 billion of that is finance lease liabilities. Another $4.3 billion sits inside other current liabilities, so total finance lease liabilities were $66.6 billion.

Equity has three lines. Common stock and paid-in capital was $117.4 billion. Retained earnings were $328.3 billion. Retained earnings are profits kept in the business.

Accumulated other comprehensive loss was $3.3 billion. It holds gains and losses that bypass the income statement, such as currency moves. It reduces the total to $442.4 billion.

Chart 3 compares the three totals at the two year-ends.

The chart shows all three totals higher. Assets rose 22.5%, liabilities 14.7% and equity 28.8%.

Retained earnings rose $90.5 billion in fiscal year 2026. Net income added $133.7 billion, while dividends took out $27.0 billion and share repurchases charged to retained earnings $16.2 billion. Our post on share buybacks covers the repurchases.

Liquidity is the ability to pay bills as they fall due. Working capital is current assets less current liabilities. Microsoft's was $38.9 billion, down from $49.9 billion. The current ratio is current assets divided by current liabilities. It was 1.23, down from 1.35.

Debt to equity is debt divided by equity. Microsoft's was 0.09, from $40.3 billion of debt and $442.4 billion of equity.

Net debt is debt less cash and short-term investments. A negative figure is net cash.

The chart shows cash and short-term investments of $76.8 billion above debt of $40.3 billion, but below debt and finance leases combined.

Microsoft's debt is below its cash and short-term investments. That is net cash of $36.5 billion.

Counting the finance lease liabilities as debt reverses the result. Debt of $40.294 billion plus $66.594 billion of finance lease liabilities, less $76.843 billion of cash and short-term investments, is net debt of $30.045 billion, or $30 billion.

Whether leases count as debt changes the answer. Our post on enterprise value covers the choice.

Read it in four steps.

Most assets sit at cost, not at what they would sell for. Property and equipment, for example, sits at cost less depreciation.

The sheet shows book value, which is equity. Market value is what investors pay for the shares.

The share price on 30 June 2026, the balance sheet date, closed at $373.02 (unadjusted). Microsoft's 7.427 billion shares were then worth $2.77 trillion. That is 6.3 times book value of $442.4 billion, a ratio called price-to-book.

Read a balance sheet by comparing what a company owns with what it owes. Microsoft's, at 30 June 2026, shows $758.4 billion of assets funded by $316.0 billion of liabilities and $442.4 billion of equity.

Multi-model Signals covers Microsoft.

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Assets equal liabilities plus equity. Assets are what a company owns. Liabilities are what it owes. Equity is the amount left for shareholders. Microsoft's balance sheet at 30 June 2026 shows $758.4 billion of assets, $316.0 billion of liabilities and $442.4 billion of equity.

Current assets are cash or items expected to turn into cash within a year. Non-current assets last longer. Microsoft's current assets were $207.7 billion at 30 June 2026. Its non-current assets, such as property and equipment at $313.1 billion and goodwill at $119.7 billion, made up the other $550.7 billion.

A listed US company files its balance sheet in its annual report, called a Form 10-K, under Item 8, with the US Securities and Exchange Commission. Quarterly reports, called Form 10-Q, carry a balance sheet for each quarter-end. Microsoft filed its fiscal year 2026 report on 29 July 2026.

Negative equity means liabilities exceed assets, so nothing is left on the books for shareholders. It is a book figure and does not state what the shares trade for. Microsoft's equity is positive, at $442.4 billion on 30 June 2026.

DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.