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Microsoft Corporation (MSFT)
The model for this company lays out financial schedules across multiple columns. Open it on a viewport at least 900px wide to work with the figures.
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DCF Implied Price
$299.94
-44.0% vs mkt
From SEC EDGAR
Market Price
$535.93
As of 2026-11-05 · Close
Statements
FY26
Ended 2026-06-30
Enterprise Value
$2.23T
PV FCFF + PV TV
Terminal value 78.7% of EV
Equity Value
$2.23T
Net Debt Adjusted
WACC
8.67%
CAPM / Capital Cost
Terminal Growth (g)
2.25%
Gordon Growth
Valuation Drivers
base scenario
WACC & Capital Cost
Risk-Free Rate (Rf)4.64%
Beta (β)0.93
Equity Risk Premium (ERP)4.50%
Cost of Equity (Ke)8.84%
Pre-Tax Cost of Debt (Kd)2.85%
Effective Tax Rate (t)21.00%
After-Tax Cost of Debt2.25%
Weights (Equity / Debt)97.4% / 2.6%
Weighted Average Cost of Capital8.67%
Source: CAPM: Rfr=4.64% (US market default for rfr (10Y sovereign yield %)), Beta=0.93 (Per-company registry benchmark beta vs primary index (0.9), Blume-adjusted), ERP=4.50% (US market default for erp (Equity Risk Premium %)). Cost of Equity=8.84% = Rf + Beta x ERP. Pre-tax Cost of Debt=2.85% (after-tax 2.25%). Capital Weights: Equity=97.4%, Debt=2.6%.
Return Metrics & Financial Health
Terminal ROIC
11.3%
+2.6% vs WACC
FCF Yield (Yr 1)
3.4%
FCFF / Equity Val
Implied EV / EBIT
12.7x
Forward Multiple
Net Debt Position
+$6,303
Net Cash Balance
FCFF & DCF Valuation Schedule
PV FCFF: $474.1B
|PV TV: $1.75T
|Net: +$6,303@ 2026-06-30
|Price: $299.94
| DCF Line Item (Mid-Year) | FY27 | FY28 | FY29 | FY30 | FY31 |
|---|---|---|---|---|---|
EBIT (Operating Profit) EBIT (Operating Profit)Definition Earnings Before Interest and Taxes: core operating profitability before capital structure and taxes. Formula: Revenue - COGS - Operating Expenses - D&A | 176,051 | 195,399 | 213,024 | 228,767 | 242,630 |
Tax Rate % Tax Rate %Definition Effective corporate tax rate applied to operating earnings for NOPAT calculation. Formula: Taxes / PBT | 19.4% | 19.8% | 20.2% | 20.6% | 21.0% |
NOPAT NOPATDefinition Net Operating Profit After Tax: un-levered profit generated purely by core operations. Formula: EBIT × (1 - Effective Tax Rate) | 141,897 | 156,710 | 169,993 | 181,641 | 191,678 |
+ D&A + D&ADefinition Depreciation & Amortization added back because it is a non-cash accounting expense. Formula: Cash Flow Statement D&A Add-back | 38,913 | 43,190 | 47,086 | 50,565 | 53,630 |
− CapEx − CapExDefinition Capital Expenditures: net cash spent on property, plant, equipment, and intangible assets. Formula: Cash Flow Statement Capital Investments | (86,230) | (78,081) | (71,398) | (67,830) | (68,814) |
± ΔNWC ± ΔNWCDefinition Change in Non-Cash Operating Working Capital: cash invested or freed up in working capital. Formula: − (Δ Receivables + Δ Inventory − Δ Payables) | -5,404 | -4,974 | -4,531 | -4,047 | -3,564 |
− Stock Comp − Stock CompDefinition Stock-based compensation deducted as a real economic cost even though non-cash under accounting rules. Formula: Cash Flow Statement SBC (when reported) | (14,069) | (15,615) | (17,023) | (18,281) | (19,389) |
= FCFF (Free Cash Flow) = FCFF (Free Cash Flow)Definition Free Cash Flow to Firm: unlevered cash flow available to all debt and equity capital providers. Formula: NOPAT + D&A − CapEx − ΔNWC − Stock Comp | 75,108 | 101,231 | 124,127 | 142,048 | 153,540 |
Discount Factor (Mid-Year) Discount Factor (Mid-Year)Definition Mid-year discount factor assuming cash flows arrive continuously throughout the year. Formula: 1 / (1 + WACC)^(t - 0.5) | 0.9593 | 0.8827 | 0.8123 | 0.7476 | 0.6880 |
PV(FCFF) PV(FCFF)Definition Present Value of Free Cash Flow discounted back to current fiscal year. Formula: FCFF × Mid-Year Discount Factor | 72,055 | 89,355 | 100,832 | 106,193 | 105,635 |
| Σ PV of Explicit Forecasts (PV FCFF) | $474,069 | ||||
| + PV of Terminal Value (2.3% g, 79% of EV) | $1,754,573 | ||||
| Enterprise Value (EV) | $2,228,642 | ||||
| + Net Cash & Liquid Assets | + $6,303 | ||||
| Equity Value DCF Implied Share Price | $2,234,945 $299.94 / share | ||||
WACC: 8.67%Cost of Equity: 8.84%Cost of Debt: 2.25%Equity Wt: 97.4%
Terminal ROIC: 11.3% (Reinvest 19.9%)
Financial Forecast Summary
| Line Item | FY27 | FY28 | FY29 | FY30 | FY31 |
|---|---|---|---|---|---|
| Revenue | $376,339 | $417,698↑ | $455,375↑ | $489,027↑ | $518,662↑ |
| EBITDA | $214,965 | $238,589↑ | $260,110↑ | $279,332↑ | $296,260↑ |
| EBIT (Operating Profit) | $176,051 | $195,399↑ | $213,024↑ | $228,767↑ | $242,630↑ |
| Net Profit (PAT) | $148,060 | $162,842↑ | $176,095↑ | $187,712↑ | $197,718↑ |
| D&A | $38,913 | $43,190↑ | $47,086↑ | $50,565↑ | $53,630↑ |
| CapEx | $86,230 | $78,081↓ | $71,398↓ | $67,830↓ | $68,814↑ |
| Operating Cash Flow | $181,569 | $201,058↑ | $218,649↑ | $234,230↑ | $247,784↑ |