Microchip Technology Inc (MCHP)
Return on total capital
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 659,900 | 1,162,500 | 1,892,300 | 2,564,200 | 3,158,700 | 3,440,200 | 3,312,200 | 3,113,600 | 2,801,300 | 2,489,900 | 2,067,100 | 1,739,500 | 1,424,900 | 1,024,600 | 877,100 | 696,400 | 635,200 | 662,200 | 663,200 | 647,700 |
| Long-term debt | US$ in thousands | 6,749,500 | 4,476,600 | 6,167,900 | 5,000,400 | 4,033,300 | 4,414,700 | 4,632,200 | 5,041,700 | 6,588,700 | 6,304,900 | 7,563,900 | 7,687,400 | 7,868,500 | 8,200,600 | 8,527,400 | 7,581,200 | 7,647,800 | 8,181,400 | 7,730,000 | 8,873,400 |
| Total stockholders’ equity | US$ in thousands | 6,031,500 | 6,275,900 | 6,406,000 | 6,657,800 | 7,080,200 | 6,968,500 | 6,831,300 | 6,513,600 | 6,311,600 | 6,103,100 | 5,977,900 | 5,894,800 | 5,803,300 | 5,702,900 | 5,519,900 | 5,337,100 | 5,297,000 | 5,443,700 | 5,501,300 | 5,585,500 |
| Return on total capital | 5.16% | 10.81% | 15.05% | 21.99% | 28.42% | 30.22% | 28.89% | 26.95% | 21.71% | 20.07% | 15.26% | 12.81% | 10.42% | 7.37% | 6.24% | 5.39% | 4.91% | 4.86% | 5.01% | 4.48% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $659,900K ÷ ($6,749,500K + $6,031,500K)
= 5.16%
Microchip Technology Inc's return on total capital has been steadily increasing over the past few years, indicating improving efficiency in generating profits from its capital investments. The ratio increased from 4.48% as of March 31, 2020, to a peak of 30.22% as of September 30, 2023, before experiencing a slight decline to 5.16% as of December 31, 2024.
The company's return on total capital significantly outperformed its early values, reflecting strong financial performance and effective capital allocation strategies during the period under review. The notable peak of 30.22% in September 30, 2023, demonstrates efficient utilization of capital to generate income.
However, the decrease in the return on total capital from the peak levels in September 2023 to 5.16% in December 2024 could signal challenges in sustaining higher profitability levels or potential changes in the capital structure that impacted the efficiency of capital utilization. Further analysis and monitoring of the company's financial performance and investment strategies are recommended to understand the drivers behind these fluctuations and assess the sustainability of its returns on capital in the future.
Peer comparison
Dec 31, 2024