Microchip Technology Inc (MCHP)

Working capital turnover

		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	Mar 31, 2020
Revenue (ttm)	US$ in thousands	4,756,900	5,496,600	6,587,100	7,634,400	8,541,300	8,944,800	8,763,700	8,438,700	8,050,200	7,638,500	7,215,100	6,820,900	6,443,800	6,038,400	5,698,100	5,438,400	5,297,700	5,233,000	5,261,300	5,274,200
Total current assets	US$ in thousands	2,995,800	2,905,500	2,948,300	3,013,000	3,219,600	3,526,400	3,269,600	3,069,300	2,833,700	2,676,000	2,643,200	2,452,600	2,200,500	2,149,100	2,157,100	2,145,200	2,152,500	2,122,100	2,135,000	2,217,200
Total current liabilities	US$ in thousands	1,330,300	3,285,700	1,520,300	2,519,400	3,293,200	3,412,600	3,219,600	3,118,600	1,611,100	2,538,400	1,485,400	1,399,000	1,218,700	1,121,800	1,089,100	2,409,600	2,522,200	1,975,200	2,585,800	1,637,400
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	—	9.10

December 31, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $4,756,900K ÷ ($2,995,800K – $1,330,300K)
= 2.86

The working capital turnover ratio for Microchip Technology Inc has displayed fluctuations over the period provided. The ratio indicates how efficiently the company is utilizing its working capital to generate sales revenue. A higher turnover ratio is generally preferred as it suggests that the company is effectively managing its working capital.

Looking at the data, we observe that the working capital turnover ratio was 9.10 on March 31, 2020, which indicates that the company generated $9.10 in revenue for each dollar of working capital invested. The ratio was not available for June and December 2020.

The ratio significantly increased to 35.62 on September 30, 2020, before declining in the subsequent quarters. It hit a low of 4.61 on June 30, 2024, suggesting a potential inefficiency in working capital management during that period.

The working capital turnover ratio spiked significantly to 175.27 on June 30, 2023, and 78.60 on September 30, 2023, indicating a strong usage of working capital to generate sales revenue during that time.

While fluctuations in the working capital turnover ratio can be expected due to various factors impacting the business, it is essential for Microchip Technology Inc to maintain a balance between efficiently utilizing its working capital and ensuring smooth operations to support its revenue generation.