A Look at Microsoft’s Cash, Debt, and Cash Flow



Cash, debt, and cash flow

In this part of our series, we’ll look at Microsoft’s (MSFT) cash and cash flow to determine whether they support the company’s increased dividend policy. In fiscal 3Q18, Microsoft’s cash and short-term investment reserves stood at ~$132.3 billion, and the company had ~$77.2 billion in debt. In fiscal 3Q18, Microsoft generated ~$12.2 billion and $9.2 billion in OCF (operating cash flow) and FCF (free cash flow), respectively.

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Top five companies according to overseas cash reserves

According to Moody’s Investors Service, Apple (AAPL) had the most cash overseas among US companies (~$230 billion). Microsoft came in second, with $113 billion in overseas cash reserves, and Cisco (CSCO) and Google parent Alphabet (GOOG) placed third and fourth, with $62 billion and $49 billion, respectively. With $52 billion in overseas cash, Oracle (ORCL) placed fifth.

Dividend and share buyback program

Though Microsoft’s market cap has exceeded $700 billion, its dividend yield still stands at 1.8%. Like peers Oracle (ORCL) and IBM (IBM), Microsoft believes in the charm of dividends. Microsoft’s dividend has risen more than 80% in the last five years. Its considerable overseas cash reserves suggest that there is a decent chance of a dividend increase in the future. In fiscal 3Q18, Microsoft returned $6.3 billion to shareholders in the form of dividends and share repurchases, marking a year-over-year increase of 37%.


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