Microchip Technology Inc (MCHP)

Inventory turnover

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019
Cost of revenue (ttm)	US$ in thousands	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	2,032,100	2,029,000	2,122,200	2,355,100
Inventory	US$ in thousands	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	685,700	708,800	734,200	733,100
Inventory turnover		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	2.86	2.89	3.21

March 31, 2024 calculation

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

The inventory turnover ratio for Microchip Technology Inc has displayed a fluctuating trend over the past few quarters. The ratio has ranged from a low of 2.01 to a high of 3.21 during the period under consideration.

The inventory turnover ratio measures the efficiency of the company in managing its inventory levels. A higher ratio indicates that the company is selling its inventory more quickly, which is generally a positive sign as it implies lower holding costs and better liquidity.

Looking at the trend, we see that the inventory turnover ratio has generally been on an upward trajectory from the end of 2019 to the middle of 2022, peaking at 3.21 in the third quarter of 2019. This suggests that the company was able to sell its inventory at a faster rate during this period.

However, after mid-2022, there seems to be a slight decline in the inventory turnover ratio, dropping to 2.96 in the first quarter of 2020, and then fluctuating around the mid-2s range up to the most recent data point.

Overall, the inventory turnover ratio for Microchip Technology Inc has shown some variability, indicating fluctuations in the company's ability to efficiently manage its inventory levels and sell products. It would be important to continue monitoring this ratio in future periods to assess any further trends and changes in the company's inventory management practices.