Microchip Technology Inc (MCHP)

Days of inventory on hand (DOH)

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Inventory turnover		1.47	1.63	1.84	2.01	2.15	2.16	2.11	2.07	2.27	2.48	2.70	2.78	2.98	3.07	3.09	3.10	3.05	3.07	3.10	2.96
DOH	days	247.50	224.16	197.86	182.04	169.93	169.33	173.14	176.44	160.44	147.07	135.11	131.51	122.56	118.94	118.29	117.85	119.66	119.07	117.81	123.16

December 31, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 1.47
= 247.50

The days of inventory on hand (DOH) for Microchip Technology Inc have shown a fluctuating trend over the past few years. From March 31, 2020, to December 31, 2021, the DOH remained relatively stable, varying between 117.81 days and 122.56 days. This suggests a consistent management of inventory levels during this period.

However, from March 31, 2022, onwards, there has been a significant increase in the DOH metric. The DOH rose sharply from 131.51 days on March 31, 2022, to 247.50 days on December 31, 2024. This substantial increase indicates that Microchip Technology Inc may be carrying excess inventory or facing challenges in selling its products within a reasonable timeframe.

An elevated DOH may lead to higher carrying costs, risk of obsolescence, and liquidity issues due to tied-up capital. Management may need to reassess and optimize their inventory management strategies to improve efficiency and profitability in light of this prolonged increase in the DOH metric.