Microchip Technology Inc (MCHP)

Payables 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
Payables	US$ in thousands	213,000	396,900	344,700	292,400	246,800
Payables turnover		12.39	6.91	6.88	7.04	8.23

March 31, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $2,638,700K ÷ $213,000K
= 12.39

The payables turnover ratio measures how efficiently a company is managing its accounts payable by evaluating how many times a company pays off its suppliers during a specific period. A higher payables turnover ratio indicates that the company is paying off its suppliers more frequently.

Analyzing the payables turnover of Microchip Technology Inc over the past five years, we observe a fluctuating trend. The payables turnover ratio increased from 8.23 in 2020 to 12.39 in 2024, indicating an improvement in the efficiency of paying off suppliers. This may suggest that Microchip Technology Inc has been managing its accounts payable more effectively in recent years.

However, the payables turnover ratio decreased in 2023 and 2022 compared to 2021, which could indicate a slower rate of paying off suppliers during those years. It will be crucial to investigate the reasons behind these fluctuations to determine if there are any underlying issues affecting the company's ability to manage its payables efficiently.

Overall, a higher payables turnover ratio, as seen in 2024, is generally favorable as it implies that the company is settling its payables promptly. Continuously monitoring and analyzing this metric can provide valuable insights into the financial health and operational efficiency of Microchip Technology Inc.