Microchip Technology Inc (MCHP)

Inventory turnover

		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
Cost of revenue (ttm)	US$ in thousands	1,933,700	2,000,200	2,181,300	2,412,900	2,638,700	2,816,200	2,868,900	2,817,300	2,740,800	2,651,200	2,557,000	2,463,200	2,371,300	2,287,800	2,189,900	2,110,000	2,059,600	2,031,800	2,027,400	2,036,100
Inventory	US$ in thousands	1,293,500	1,356,300	1,339,600	1,308,000	1,316,000	1,311,100	1,330,900	1,336,400	1,324,900	1,165,400	1,030,300	911,800	854,400	768,200	713,600	683,800	665,000	666,100	661,400	657,200
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

March 31, 2025 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,933,700K ÷ $1,293,500K
= 1.49

The inventory turnover ratio for Microchip Technology Inc has been gradually decreasing over the last few years. It decreased from 3.10 in June 30, 2020, to 1.49 in March 31, 2025. This trend suggests that the company is taking longer to sell its inventory, which could indicate potential issues with inventory management or a slowdown in sales. A declining inventory turnover ratio may also lead to higher carrying costs and obsolete inventory.

A lower inventory turnover ratio could also imply that Microchip Technology Inc is facing challenges in effectively managing its inventory levels, perhaps due to overstocking or changes in demand for its products. This could potentially lead to lower profitability and operational inefficiencies within the company.

It is important for Microchip Technology Inc to closely monitor its inventory turnover ratio and take actions to improve it, such as optimizing inventory levels, streamlining operations, and implementing more effective inventory management strategies. Doing so could help the company enhance its financial performance and overall operational efficiency in the future.