Microchip Technology Inc (MCHP)

Inventory turnover

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Cost of revenue	US$ in thousands	2,638,700	2,740,800	2,371,300	2,059,600	2,032,100
Inventory	US$ in thousands	1,316,000	1,324,900	854,400	665,000	685,700
Inventory turnover		2.01	2.07	2.78	3.10	2.96

March 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $2,638,700K ÷ $1,316,000K
= 2.01

The inventory turnover ratio of Microchip Technology Inc has been fluctuating over the past five years. The ratio has decreased from 3.10 in March 2021 to 2.01 in March 2024. This indicates that, on average, the company's inventory was turned over 2.01 times during the most recent fiscal year.

A lower inventory turnover ratio may suggest that the company is holding onto its inventory for a longer period, which could tie up capital and potentially lead to obsolete or outdated inventory issues. Conversely, a higher ratio may indicate efficient management of inventory and quicker sales turnover.

It is important for the company to continuously evaluate and optimize its inventory management strategies to ensure the right balance between maintaining adequate inventory levels to meet demand and minimizing carrying costs. fluctuations in the inventory turnover ratio may also be reflective of shifts in market demand, production efficiency, or supply chain disruptions.