What is a cash flow waterfall?

A cash flow waterfall is a bar chart that walks from operating cash flow through capital expenditure to free cash flow, then shows how the remaining cash is allocated — acquisitions, buybacks, dividends, debt, and other financing — ending at the net change in cash. Each step is colour-coded: green bars add to the running total, red bars subtract.

How does Microsoft (MSFT) spend its free cash flow?

For TTM through Q1 2026, Microsoft generated $170B of operating cash flow and $72.9B of free cash flow — a free cash flow margin of 42.9% of operating cash flow. The waterfall breaks down how the remaining cash was allocated across investing and financing activities.

How much did Microsoft (MSFT) return via buybacks and dividends?

The waterfall shows buybacks (share repurchases) and dividends paid as separate steps in the financing section. Together these represent Microsoft's shareholder returns for TTM through Q1 2026. You can compare these against free cash flow to assess the capital-return payout ratio.

Microsoft (MSFT) Cash Flow Waterfall

Operating CF

$170B

Capex

-$97.2B

Free Cash Flow

$72.9B

FCF Margin

+42.9%

Cash flow waterfall for Microsoft (MSFT) — TTM through Q1 2026

Free cash flow: $72.9B

Cash flow breakdown for Microsoft (MSFT) — TTM through Q1 2026

Line item	Amount	Running total
Operating Cash Flow	$170B	$170B
Capital Expenditure	-$97.2B	$72.9B
Free Cash Flow	$72.9B	$72.9B
Acquisitions	-$3.03B	$69.9B
Other Investing	-$15B	$54.9B
Share Buybacks	-$22.2B	$32.7B
Dividends Paid	-$25.9B	$6.81B
Net Debt Change	$5.96B	$12.8B
Other Financing & FX	-$9.49B	$3.28B
Net Cash Increase	$3.28B	$3.28B

Operating Cash Flow$170B
Capital Expenditure-$97.2B
Free Cash Flow$72.9B
Acquisitions-$3.03B
Other Investing-$15B
Share Buybacks-$22.2B
Dividends Paid-$25.9B
Net Debt Change$5.96B
Other Financing & FX-$9.49B
Net Cash Increase$3.28B

Want to see what drove the FCF change?Free Cash Flow Bridge

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