MICROSOFT CORPORATION (MSFT) FY2026 Q2 Statement of Cash Flows

Income StatementCash FlowBalance Sheet

Statement of Cash Flows

2025-10-01 to 2025-12-31

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MICROSOFT CORPORATION cash flow reconciliation, Oct 1, 2025 through Dec 31, 2025One connected Sankey reconciles operating, investing and financing net cash flows through a shared cash pool, from beginning cash to ending cash. Ribbons flow left to right on one dollar scale. Activity totals are dark gray; beginning and ending cash are blue. Cash basis for beginning and ending balances and net cash change: Cash, cash equivalents, and restricted cash. Intermediate calculation bars are lighter gray. Net income is green for profit and red for loss. Identified asset purchases, sales and maturities are blue in either cash direction. Orange marks positive customer-advance and deferred-revenue changes that add to operating cash in the reconciliation. These are net changes, not gross customer receipts. Negative changes are neutral reconciliation adjustments; they do not by themselves identify cash payments. Purple identifies capital transactions such as borrowing, repayments, share issuance and dividends. Free cash flow is a separate comparison, not an added cash flow. Read chart description and values below for full signed amounts, including zero items.Net income → Net cash from operating activities: $35,758,000,000.00Net income → Operating adjustments reconciliation: $2,700,000,000.00Depreciation, amortization, and other → Operating adjustments reconciliation: $9,198,000,000.00Deferred income taxes → Operating adjustments reconciliation: $4,446,000,000.00Stock-based compensation expense → Operating adjustments reconciliation: $3,219,000,000.00Other current liabilities → Operating adjustments reconciliation: $2,802,000,000.00Accounts payable → Operating adjustments reconciliation: $1,197,000,000.00Other current assets → Operating adjustments reconciliation: $619,000,000.00Inventories → Operating adjustments reconciliation: $70,000,000.00Operating adjustments reconciliation → Net recognized losses (gains) on investments and derivatives: $9,931,000,000.00Operating adjustments reconciliation → Unearned revenue: $7,483,000,000.00Operating adjustments reconciliation → Accounts receivable: $3,436,000,000.00Operating adjustments reconciliation → Other long-term assets: $1,288,000,000.00Operating adjustments reconciliation → Other long-term liabilities: $1,193,000,000.00Operating adjustments reconciliation → Income taxes: $920,000,000.00Maturities of investments → investing reconciliation: $12,417,000,000.00Sales of investments → investing reconciliation: $5,691,000,000.00investing reconciliation → Additions to property and equipment: $29,876,000,000.00investing reconciliation → Purchases of investments: $9,845,000,000.00investing reconciliation → Other, net: $637,000,000.00investing reconciliation → Acquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets: $455,000,000.00Net cash used in financing activities → financing reconciliation: $17,617,000,000.00Common stock issued → financing reconciliation: $259,000,000.00financing reconciliation → Common stock repurchased: $7,415,000,000.00financing reconciliation → Common stock cash dividends paid: $6,762,000,000.00financing reconciliation → Repayments of debt: $3,000,000,000.00financing reconciliation → Other, net: $699,000,000.00Net cash used in investing activities → investing reconciliation: $22,705,000,000.00Exchange-rate effect → Cash sources and uses: $11,000,000.00Beginning cash: Cash, cash equivalents, and restricted cash → Cash sources and uses: $28,849,000,000.00Net cash from operating activities → Cash sources and uses: $35,758,000,000.00Cash sources and uses → Ending cash: Cash, cash equivalents, and restricted cash: $24,296,000,000.00Cash sources and uses → Net cash used in investing activities: $22,705,000,000.00Cash sources and uses → Net cash used in financing activities: $17,617,000,000.00Net income: $38,458,000,000.00Net income+$38.46 BDepreciation, amortization, and other: $9,198,000,000.00Depreciation, amort. & other+$9.20 BStock-based compensation expense: $3,219,000,000.00Stock-based compensation+$3.22 BNet recognized losses (gains) on investments and derivatives: -$9,931,000,000.00Investment & derivative gain & loss−$9.93 BDeferred income taxes: $4,446,000,000.00Deferred income taxes+$4.45 BAccounts receivable: -$3,436,000,000.00Accounts receivable−$3.44 BInventories: $70,000,000.00Inventories+$70.00 MOther current assets: $619,000,000.00Other current assets+$619.00 MOther long-term assets: -$1,288,000,000.00Other noncurrent assets−$1.29 BAccounts payable: $1,197,000,000.00Accounts payable+$1.20 BUnearned revenue: -$7,483,000,000.00Deferred revenue−$7.48 BIncome taxes: -$920,000,000.00Income taxes payable−$920.00 MOther current liabilities: $2,802,000,000.00Other current liabilities+$2.80 BOther long-term liabilities: -$1,193,000,000.00Other noncurrent liabilities−$1.19 BNet cash from operating activities: $35,758,000,000.00Operating cash+$35.76 BOperating adjustments reconciliation: $24,251,000,000.00Repayments of debt, maturities of 90 days or less: $0.00Repayments of debt: -$3,000,000,000.00Debt repaid, 90+ days−$3.00 BCommon stock issued: $259,000,000.00Common stock issued+$259.00 MCommon stock repurchased: -$7,415,000,000.00Common stock repurchases−$7.42 BCommon stock cash dividends paid: -$6,762,000,000.00Common dividends paid−$6.76 BOther, net: -$699,000,000.00Other financing, net−$699.00 MNet cash used in financing activities: -$17,617,000,000.00. Cash required to fund net payments.Financing cash−$17.62 Bfinancing reconciliation: $17,876,000,000.00Additions to property and equipment: -$29,876,000,000.00PP&E purchases−$29.88 BAcquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets: -$455,000,000.00Acquisitions & intangible purchases−$455.00 MPurchases of investments: -$9,845,000,000.00Investment purchases−$9.85 BMaturities of investments: $12,417,000,000.00AFS securities maturities+$12.42 BSales of investments: $5,691,000,000.00Sales of investments+$5.69 BOther, net: -$637,000,000.00Other investing, net−$637.00 MNet cash used in investing activities: -$22,705,000,000.00. Cash required to fund net payments.Investing cash−$22.71 Binvesting reconciliation: $40,813,000,000.00Cash sources and uses: $64,618,000,000.00Beginning cash: Cash, cash equivalents, and restricted cash: $28,849,000,000.00Beginning cash$28.85 BEnding cash: Cash, cash equivalents, and restricted cash: $24,296,000,000.00Ending cash$24.30 BExchange-rate effect: $11,000,000.00FX effect+$11.00 MCASH RECONCILIATIONOperatingflowsInvestingflowsFinancingflowsFree cash flow$5.88 BOperating cash − cash spent on PP&ECash flow / Net income0.93×Operating cash flow ÷ net incomeNet cash change−$4.55 BEnding cash − beginning cash
Chart details

MICROSOFT CORPORATION cash flow reconciliation, Oct 1, 2025 through Dec 31, 2025

Cash flows for Oct 1, 2025 through Dec 31, 2025. Cash basis: Cash, cash equivalents, and restricted cash. Beginning cash: Sep 30, 2025. Ending cash: Dec 31, 2025. Beginning and ending cash are dated balances. Positive cash flows add cash; negative cash flows reduce it.

Beginning cash on Sep 30, 2025
28,849,000,000 US dollars. Beginning cash: Cash, cash equivalents, and restricted cash
Operating activities
35,758,000,000 US dollars. Net cash provided.
Net income
38,458,000,000 US dollars
Depreciation, amortization, and other
9,198,000,000 US dollars
Stock-based compensation expense
3,219,000,000 US dollars
Net recognized losses (gains) on investments and derivatives
negative 9,931,000,000 US dollars
Deferred income taxes
4,446,000,000 US dollars
Accounts receivable
negative 3,436,000,000 US dollars
Inventories
70,000,000 US dollars
Other current assets
619,000,000 US dollars
Other long-term assets
negative 1,288,000,000 US dollars
Accounts payable
1,197,000,000 US dollars
Unearned revenue
negative 7,483,000,000 US dollars
Income taxes
negative 920,000,000 US dollars
Other current liabilities
2,802,000,000 US dollars
Other long-term liabilities
negative 1,193,000,000 US dollars
Investing activities
negative 22,705,000,000 US dollars. Net cash used.
Additions to property and equipment
negative 29,876,000,000 US dollars
Acquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets
negative 455,000,000 US dollars
Purchases of investments
negative 9,845,000,000 US dollars
Maturities of investments
12,417,000,000 US dollars
Sales of investments
5,691,000,000 US dollars
Other, net
negative 637,000,000 US dollars
Financing activities
negative 17,617,000,000 US dollars. Net cash used.
Repayments of debt, maturities of 90 days or less
0 US dollars
Repayments of debt
negative 3,000,000,000 US dollars
Common stock issued
259,000,000 US dollars
Common stock repurchased
negative 7,415,000,000 US dollars
Common stock cash dividends paid
negative 6,762,000,000 US dollars
Other, net
negative 699,000,000 US dollars
Operating adjustment reconciliation
24,251,000,000 US dollars. Intermediate calculation joining the operating reconciliation branches. Its gross amount includes any portion of net income routed through this junction. It is not an additional cash source or use.
financing gross reconciliation
17,876,000,000 US dollars. Gross amount at the activity's junction before offsetting its receipts and deductions. It is not an additional cash source or use.
investing gross reconciliation
40,813,000,000 US dollars. Gross amount at the activity's junction before offsetting its receipts and deductions. It is not an additional cash source or use.
Exchange-rate effect
11,000,000 US dollars
Ending cash on Dec 31, 2025
24,296,000,000 US dollars. Ending cash: Cash, cash equivalents, and restricted cash
Cash sources and uses
64,618,000,000 US dollars. Opening cash plus net sources, equal to net uses plus ending cash.
Net cash change
negative 4,553,000,000 US dollars. Ending cash minus beginning cash.
Cash flow / Net income
0.93×. Operating cash flow divided by reconciliation net income for the same period. Black from 0.90× through 1.10×; green above 1.10×; red below 0.90×. Color uses the unrounded ratio.
Operating cash flow
35,758,000,000 US dollars. Operating cash flow used in the free cash flow calculation.
Cash purchases of property, plant and equipment
29,876,000,000 US dollars. These cash purchases are already included in investing activities above.
Free cash flow
5,882,000,000 US dollars. A supplemental measure; finance-lease payments are excluded from this definition.

Chart connections

  • Beginning cash plus operating, investing and financing cash flows plus the exchange-rate effect equals ending cash. Negative amounts reduce cash.
  • Financing contributions meet at a reconciliation junction before connecting to the net cash total.
  • Investing contributions meet at a reconciliation junction before connecting to the net cash total.
  • Operating reconciliation adjustments are not all independent cash receipts.
  • Net income exceeds operating cash. The diagram allocates $35.76B of net income directly to operating cash and $2.70B to the adjustment junction, where it combines with other additions to reconcile deductions. This is an accounting presentation, not a tracing of cash receipts.
  • Each activity has one net cash bar connected to the shared cash pool. Positive activity totals enter the pool; negative activity totals leave the pool to fund that activity's net payments. The central pool does not assign a particular funding source to a particular payment.
  • The intermediate calculation bars include both sides of the displayed activity breakdowns; they are not additional cash flows.
  • Operating cash flow minus cash purchases of property, plant and equipment equals free cash flow: 35,758,000,000 US dollars minus 29,876,000,000 US dollars equals 5,882,000,000 US dollars.
MICROSOFT CORPORATION (MSFT) FY2026 Q2 Statement of Cash Flows Sankey chart
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