Microchip Technology Inc (MCHP)

Activity ratios

Short-term

Turnover ratios

	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
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
Receivables turnover	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	5.65	6.54	6.32	5.83
Payables turnover	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	8.23	9.69	9.01	9.59
Working capital turnover	15.47	—	78.60	175.27	—	6.58	55.51	6.23	6.47	6.56	5.88	5.34	—	—	35.62	—	9.10	—	—	—

The activity ratios of Microchip Technology Inc show varied trends over the specified periods.

1. Inventory turnover has been relatively stable, ranging from 2.01 to 3.21 over the past five quarters. This indicates that the company is efficiently managing its inventory levels and turning over its inventory at a consistent rate.

2. Receivables turnover has fluctuated between 5.24 and 6.93 in the same period. This suggests that the company's collection process for accounts receivable has been somewhat inconsistent, impacting the speed at which it collects outstanding payments from customers.

3. Payables turnover has shown fluctuations from 6.73 to 12.39 over the specified quarters. The higher turnover indicates that the company is paying its suppliers more frequently, which can be seen as advantageous in terms of cash flow management.

4. Working capital turnover has been highly variable, ranging from 5.34 to 175.27. The sharp increase in working capital turnover in some periods can indicate an enhanced operational efficiency as the company is generating more revenue per unit of working capital.

Overall, while Microchip Technology Inc has demonstrated efficient management of its inventory and accounts payable, there are fluctuations in receivables turnover and working capital turnover that suggest areas for potential improvement in managing accounts receivable and optimizing working capital utilization.

Average number of days

		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
Days of inventory on hand (DOH)	days	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	123.16	127.51	126.28	113.62
Days of sales outstanding (DSO)	days	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	64.64	55.85	57.73	62.63
Number of days of payables	days	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	44.33	37.65	40.52	38.08

The days of inventory on hand (DOH) for Microchip Technology Inc have shown a fluctuating trend over the past few quarters, ranging from 113.62 days to 182.04 days. This indicates variability in the efficiency of managing inventory levels. The company may need to focus on optimizing inventory turnover to avoid overstocking or stockouts, which could impact liquidity and profitability.

In contrast, the days of sales outstanding (DSO) have ranged from 52.68 days to 69.62 days during the same period. Lower DSO values suggest faster collection of receivables, reflecting positively on cash flow management. However, the increasing trend in DSO could indicate potential issues with credit policies or an increase in uncollectible accounts, which may require closer monitoring.

The number of days of payables ranges from 29.46 days to 54.21 days. A lower number of days of payables signifies that the company is paying its suppliers quicker, which could strain cash flow. On the other hand, higher days of payables could indicate potential opportunities for cash conservation through extending payment terms. Maintaining an optimal balance in payables is crucial for managing working capital efficiently.

In conclusion, Microchip Technology Inc should focus on improving inventory management practices, maintaining a balanced approach to receivables collection, and optimizing payables to enhance liquidity and overall financial performance. Regular monitoring and adjustment of these activity ratios can help the company achieve better working capital management.

Long-term

	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
Fixed asset turnover	6.39	7.07	7.41	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	6.02	5.80	5.73	5.67
Total asset turnover	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	0.30	0.30	0.30	0.30

The fixed asset turnover ratio for Microchip Technology Inc has remained relatively stable over the past several quarters, ranging from 5.67 to 7.41. This indicates that the company is generating revenue efficiently from its investment in fixed assets such as property, plant, and equipment. A higher fixed asset turnover ratio suggests that the company is effectively utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also shown consistency, albeit at a lower level, ranging from 0.30 to 0.54. This ratio indicates how effectively the company is generating sales from all its assets, including both fixed and current assets. A higher total asset turnover ratio implies that the company is efficient in generating sales relative to its total assets.

Overall, the stable and relatively high fixed asset turnover ratios suggest that Microchip Technology Inc is efficiently utilizing its fixed assets to generate revenue. Additionally, the consistent total asset turnover ratios indicate that the company is effectively generating sales from its total asset base, reflecting a good level of operational efficiency and asset utilization.