Microchip Technology Inc (MCHP)

Activity ratios

Short-term

Turnover ratios

	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
Receivables turnover	—	5.55	5.26	6.01	6.68	6.11	5.24	5.98	6.46	6.85	6.74	6.30	6.36	6.93	6.13	5.69	5.45	5.93	5.79	5.88
Payables turnover	—	10.21	10.68	12.29	12.39	11.63	10.12	10.02	6.91	7.47	6.73	8.08	6.88	7.59	7.24	7.42	7.04	7.82	9.35	9.65
Working capital turnover	—	2.86	—	4.61	15.47	—	78.60	175.27	—	6.58	55.51	6.23	6.47	6.56	5.88	5.34	—	—	35.62	—

Microchip Technology Inc's activity ratios provide insights into how efficiently the company manages its assets and operations.

1. Inventory Turnover:
The inventory turnover ratio has shown a declining trend over the past few years, moving from 3.10 in June 2020 to 1.49 in March 2025. This indicates that the company is taking longer to sell its inventory, which may suggest issues with managing and selling products efficiently.

2. Receivables Turnover:
The receivables turnover ratio fluctuated throughout the period but generally improved from 5.88 in June 2020 to 6.68 in March 2024. However, data is missing for March 2025. A higher receivables turnover ratio suggests that the company is collecting its accounts receivable faster, which is generally a positive sign.

3. Payables Turnover:
The payables turnover ratio has been inconsistent over the years, with significant fluctuations. It ranged from 7.04 in March 2021 to 12.39 in March 2024. A higher payables turnover ratio indicates that the company is efficiently managing its payables but may also suggest potential issues with supplier relationships.

4. Working Capital Turnover:
The working capital turnover ratio data shows varied results and some missing points. Notably, there was a significant increase in the ratio from 5.34 in June 2021 to 175.27 in June 2023. This could indicate a more efficient utilization of working capital during that period. However, data gaps and fluctuations make it difficult to draw sustained conclusions.

In conclusion, Microchip Technology Inc should focus on improving its inventory turnover efficiency and maintaining stable performance in receivables turnover and payables turnover ratios. The fluctuating ratios suggest the need for closer monitoring and potential operational improvements.

Average number of days

		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
Days of inventory on hand (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
Days of sales outstanding (DSO)	days	—	65.77	69.35	60.72	54.68	59.75	69.62	61.02	56.46	53.28	54.15	57.92	57.40	52.68	59.58	64.10	66.96	61.58	63.03	62.04
Number of days of payables	days	—	35.75	34.17	29.71	29.46	31.39	36.07	36.44	52.86	48.85	54.21	45.15	53.06	48.07	50.44	49.20	51.82	46.67	39.05	37.84

Microchip Technology Inc's Days of Inventory on Hand (DOH) has been steadily increasing over the years, implying a longer time is taken to sell inventory. This could indicate potential inefficiencies in managing inventory levels effectively. On the other hand, the Days of Sales Outstanding (DSO) has shown some fluctuations but generally has been maintained at moderate levels, suggesting a reasonable collection period for accounts receivable.

The Number of Days of Payables has shown a downward trend initially, implying that the company was taking longer to pay its creditors. However, there was a significant decrease in Days of Payables by December 31, 2023, suggesting more prompt payments to suppliers. This could have positive implications on the company's relationships with suppliers and cash flow management.

Overall, while the company is experiencing challenges with increasing inventory days, it seems to have made improvements in managing payables efficiently. A close monitoring of inventory levels and continued focus on optimizing payment processes could help Microchip Technology Inc improve its working capital management.

Long-term

	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
Fixed asset turnover	—	—	—	—	—	—	—	7.39	7.16	7.23	7.02	7.25	7.05	6.93	6.54	6.39	6.36	6.40	6.37	6.23
Total asset turnover	—	0.30	0.35	0.42	0.48	0.53	0.54	0.53	0.52	0.50	0.47	0.45	0.42	0.40	0.37	0.35	0.33	0.32	0.31	0.31

The fixed asset turnover ratio for Microchip Technology Inc has been on an increasing trend over the years, indicating that the company has been utilizing its fixed assets more efficiently to generate revenue. The ratio has steadily improved from 6.23 in June 2020 to 7.39 in June 2023. This suggests that the company is generating more sales relative to its investment in fixed assets.

On the other hand, the total asset turnover ratio, which measures how efficiently a company is using all its assets to generate revenue, has also shown improvement over the years. The ratio has increased from 0.31 in June 2020 to 0.53 in March 2024, before declining slightly to 0.42 in June 2024. This indicates that Microchip Technology Inc has been able to generate more sales per dollar of total assets employed.

Overall, the increasing trends in both fixed asset turnover and total asset turnover ratios suggest that Microchip Technology Inc has been effectively managing its assets to drive revenue growth and improve its overall operational efficiency.