Microchip Technology Inc (MCHP)

Return on total capital

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	2,564,200	3,113,600	1,739,500	696,400	647,700
Long-term debt	US$ in thousands	5,000,400	5,041,700	7,687,400	7,581,200	8,873,400
Total stockholders’ equity	US$ in thousands	6,657,800	6,513,600	5,894,800	5,337,100	5,585,500
Return on total capital		21.99%	26.95%	12.81%	5.39%	4.48%

March 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,564,200K ÷ ($5,000,400K + $6,657,800K)
= 21.99%

Microchip Technology Inc's return on total capital has shown a fluctuating trend over the past five years. The company's return on total capital was highest in the fiscal year ending March 31, 2023, at 26.95%, indicating that for that year, the company generated significant returns relative to its total capital employed.

In the subsequent years, Microchip's return on total capital decreased, but remained positive and above 10% in both fiscal years ending March 31, 2022, and March 31, 2024. This suggests that the company continued to generate reasonable returns on its total capital despite the decline.

The lower returns on total capital in the fiscal years ending March 31, 2021, and March 31, 2020, at 5.39% and 4.48% respectively, indicate a comparatively weaker performance during those periods. However, it is important to note that Microchip Technology Inc's return on total capital has demonstrated an overall improving trend over the five-year period, with the most recent data showing a return of 21.99%.

This indicates that the company has been able to effectively employ its total capital to generate returns for its shareholders, though fluctuations in economic conditions and operational performance have influenced the ratio over time.