Microchip Technology Inc (MCHP)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | 1.35 |
| Quick ratio | 1.08 | 0.40 | 0.93 | 0.58 | 0.51 | 0.58 | 0.54 | 0.49 | 0.91 | 0.57 | 1.03 | 0.99 | 1.02 | 1.11 | 1.18 | 0.53 | 0.50 | 0.64 | 0.49 | 0.82 |
| Cash ratio | 0.44 | 0.09 | 0.21 | 0.13 | 0.09 | 0.08 | 0.08 | 0.08 | 0.18 | 0.12 | 0.26 | 0.23 | 0.26 | 0.23 | 0.26 | 0.12 | 0.15 | 0.19 | 0.15 | 0.25 |
Based on the provided data, the liquidity ratios of Microchip Technology Inc show fluctuations over the fiscal years from March 31, 2020, to December 31, 2024.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. Microchip's current ratio ranged from a low of 0.83 on June 30, 2020, to a high of 2.25 on December 31, 2024. The ratio generally stayed above 1, indicating the company generally had enough current assets to cover its current liabilities.
2. Quick Ratio: The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets. Microchip's quick ratio varied from a low of 0.40 on September 30, 2024, to a high of 1.18 on June 30, 2021. The ratio generally remained above 1 in most periods, signifying the company's ability to meet its short-term obligations without relying on selling inventory.
3. Cash Ratio: The cash ratio indicates the proportion of a company's current assets held in cash or cash equivalents. Microchip's cash ratio ranged from a low of 0.08 on various dates to a high of 0.44 on December 31, 2024. The company showed fluctuations in its cash holdings over time, which could impact its ability to cover immediate liabilities with cash on hand.
Overall, Microchip Technology Inc's liquidity ratios suggest that the company generally maintained a satisfactory level of liquidity over the analyzed periods, with variations in specific ratios potentially reflecting changes in the company's operating cycle and cash management strategies.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 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 | 143.47 |
The cash conversion cycle of Microchip Technology Inc has exhibited fluctuations over the years, reflecting changes in the company's operating efficiency and liquidity management. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash received from sales, then back into cash through payment of expenses.
From March 31, 2020, to December 31, 2024, the trend of the cash conversion cycle shows periods of both improvement and deterioration. It started at 143.47 days in March 2020, decreased to 127.17 days by December 2021, indicating a more efficient management of cash flows. However, the cycle increased to 277.53 days by December 2024, suggesting potential issues with working capital management or sales efficiency.
The significant increase in the cash conversion cycle from 2022 onwards, reaching its peak at 277.53 days by December 31, 2024, may indicate possible challenges in streamlining operations, managing inventory levels efficiently, or collecting receivables promptly.
Overall, Microchip Technology Inc's cash conversion cycle analysis reveals fluctuations that require further investigation to identify the underlying causes and implement strategies to enhance cash flow efficiency and overall financial performance.