Microchip Technology Inc (MCHP)
Solvency ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.32 | 0.31 | 0.47 | 0.46 | 0.51 |
| Debt-to-capital ratio | 0.43 | 0.44 | 0.57 | 0.59 | 0.61 |
| Debt-to-equity ratio | 0.75 | 0.77 | 1.30 | 1.42 | 1.59 |
| Financial leverage ratio | 2.38 | 2.51 | 2.75 | 3.09 | 3.12 |
The solvency ratios for Microchip Technology Inc indicate the company's ability to meet its long-term financial obligations and manage its debt levels over the years.
The debt-to-assets ratio has shown a declining trend from 0.51 in 2020 to 0.32 in 2024, indicating that the company has been able to reduce its reliance on debt to finance its assets, which is generally a positive sign for solvency.
Similarly, the debt-to-capital ratio has also decreased from 0.61 in 2020 to 0.43 in 2024, reflecting the company's improved ability to fund its operations through a mix of debt and equity capital.
The debt-to-equity ratio has shown a significant improvement from 1.59 in 2020 to 0.75 in 2024, indicating that Microchip Technology Inc has been successful in reducing its debt levels relative to shareholder equity, which enhances the company's financial stability.
The financial leverage ratio, which measures the company's reliance on debt financing, has decreased from 3.12 in 2020 to 2.38 in 2024, indicating that the company has been able to lower its financial leverage and reduce the risks associated with high debt levels.
Overall, the improving solvency ratios of Microchip Technology Inc suggest that the company has been effectively managing its debt levels, reducing financial risks, and enhancing its financial health over the years.
Coverage ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 12.93 | 15.27 | 6.77 | 1.95 | 1.30 |
Microchip Technology Inc's interest coverage ratio has shown a mixed trend over the past five years. The ratio measures the company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio indicates a better ability to cover interest expenses.
In 2024, the interest coverage ratio stands at 12.93, which shows the company's ability to cover its interest expenses has slightly decreased compared to the previous year but remains at a healthy level. This indicates that Microchip Technology Inc is generating sufficient operating income to comfortably cover its interest payments.
In 2023, the interest coverage ratio was even higher at 15.27, suggesting a robust ability to meet interest obligations and indicating financial stability.
In 2022, the interest coverage ratio was 6.77, a significant decrease from the previous year. This could raise some concerns as it may indicate a decreased ability to cover interest expenses with operating income.
In 2021 and 2020, the interest coverage ratios were 1.95 and 1.30, respectively. These ratios are relatively low and may signal potential financial distress, as the company's operating income may not be sufficient to cover interest payments comfortably.
Overall, while Microchip Technology Inc has shown fluctuations in its interest coverage ratio over the years, it has generally maintained a healthy ability to cover its interest expenses, with the notable exception of 2022. Investors and stakeholders should closely monitor this ratio to assess the company's financial health and stability.