Microchip Technology Inc (MCHP)

Return on total capital

		Mar 31, 2025	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	—	2,558,700	3,113,600	1,739,500	696,400
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	7,078,300	6,657,800	6,513,600	5,894,800	5,337,100
Return on total capital		0.00%	38.43%	47.80%	29.51%	13.05%

March 31, 2025 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $—K ÷ ($—K + $7,078,300K)
= 0.00%

Microchip Technology Inc's return on total capital has shown significant fluctuations over the past five years. The ratio stood at 13.05% as of March 31, 2021, indicating a moderate return on invested capital. Subsequently, there was a considerable improvement in the ratio to 29.51% by March 31, 2022, reflecting increased efficiency in generating returns from the total capital employed.

The company's return on total capital experienced a notable surge to 47.80% by March 31, 2023, suggesting a strong performance in utilizing its total capital effectively to generate profits. However, there was a decrease in the ratio to 38.43% by March 31, 2024, although it remained at a relatively high level compared to the base year.

Interestingly, by March 31, 2025, the return on total capital dropped to 0.00%, indicating a potential challenge or anomaly in the financial performance of Microchip Technology Inc. This significant decline may warrant further investigation into the factors influencing the company's ability to generate returns on its total capital.

Overall, the trend in Microchip Technology Inc's return on total capital demonstrates both positive and concerning movements over the five-year period, emphasizing the importance of monitoring and analyzing financial ratios to gain insights into the company's operational efficiency and financial performance.