Microchip Technology Inc (MCHP)
Liquidity 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | — | 2.25 | 0.88 | 1.94 | 1.20 | 0.98 | 1.03 | 1.02 | 0.98 | 1.76 | 1.05 | 1.78 | 1.75 | 1.81 | 1.92 | 1.98 | 0.89 | 0.85 | 1.07 | 0.83 |
| Quick ratio | — | 1.08 | 0.40 | 0.93 | 0.58 | 0.51 | 0.58 | 0.54 | 0.49 | 1.09 | 0.57 | 1.03 | 0.99 | 1.02 | 1.11 | 1.18 | 0.53 | 0.50 | 0.64 | 0.49 |
| Cash ratio | — | 0.44 | 0.09 | 0.21 | 0.13 | 0.09 | 0.08 | 0.08 | 0.08 | 0.36 | 0.12 | 0.26 | 0.23 | 0.26 | 0.23 | 0.26 | 0.12 | 0.15 | 0.19 | 0.15 |
Microchip Technology Inc's current ratio has shown some variability over the periods provided, ranging from a low of 0.83 to a high of 2.25. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities to meet its short-term obligations. The current ratio has fluctuated between 0.83 and 2.25, indicating some periods of potential liquidity challenges or excess liquidity.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also fluctuated over the periods provided. Ranging from 0.40 to 1.18, the quick ratio shows that Microchip Technology Inc may face some challenges in meeting its short-term obligations without relying on inventory in certain periods.
In terms of the cash ratio, which is the most conservative liquidity measure as it only includes cash and cash equivalents, Microchip Technology Inc has shown varying levels of liquidity over the periods provided. The cash ratio has ranged from 0.08 to 0.44, indicating that the company may have faced periods of tight liquidity or had significant cash reserves on hand.
Overall, while Microchip Technology Inc's liquidity ratios have shown fluctuations over time, it is essential for the company to maintain a healthy balance between liquidity and operational efficiency to ensure it can meet its short-term obligations while also investing in long-term growth opportunities.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 244.16 | 277.53 | 259.33 | 228.87 | 207.25 | 198.28 | 202.88 | 197.71 | 180.04 | 164.87 | 147.00 | 147.88 | 135.85 | 127.17 | 128.08 | 133.19 | 132.99 | 134.57 | 143.06 | 142.01 |
The cash conversion cycle of Microchip Technology Inc has shown some fluctuations over the years. The cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has ranged from around 127 days to 277 days.
In the past few years, there has been an increasing trend in the cash conversion cycle, reaching a peak of 277.53 days as of December 31, 2024. This indicates that Microchip Technology Inc may be taking longer to turn its investments into cash receipts, which could lead to liquidity challenges or inefficiencies in working capital management.
It's important to closely monitor the cash conversion cycle as a prolonged cycle can tie up cash resources and negatively impact the company's overall financial health. Management may need to assess and improve inventory management, accounts receivable collection, and payable payment processes to optimize the cycle and enhance cash flow efficiency.