Microchip Technology Inc (MCHP)

Days of inventory on hand (DOH)

		Mar 31, 2025	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
Inventory turnover		1.49	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
DOH	days	244.16	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

March 31, 2025 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 1.49
= 244.16

The days of inventory on hand (DOH) for Microchip Technology Inc have shown an increasing trend over the past few years, indicating a potential inefficiency in managing inventory levels. From June 30, 2020, to December 31, 2024, the DOH increased steadily from 117.81 days to 247.50 days, peaking in December 2024.

The significant rise in DOH suggests that Microchip may be carrying excess inventory or experiencing challenges in selling its products efficiently. High levels of inventory can tie up capital and increase carrying costs, thus impacting the company's profitability and cash flow.

It is essential for Microchip to closely monitor its inventory management practices, optimize procurement processes, and align production levels with actual demand to control the increasing DOH trend. By improving inventory turnover and reducing excess inventory levels, the company can enhance operational efficiency and financial performance in the long run.