Microchip Technology Inc (MCHP)

Debt-to-capital ratio

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
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
Debt-to-capital ratio		0.43	0.44	0.57	0.59	0.61

March 31, 2024 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $5,000,400K ÷ ($5,000,400K + $6,657,800K)
= 0.43

The debt-to-capital ratio of Microchip Technology Inc has been showing a declining trend over the past five years, decreasing from 0.61 in March 2020 to 0.43 in March 2024. This decrease indicates a lower reliance on debt financing relative to total capital employed by the company. A lower debt-to-capital ratio suggests that the company has been able to reduce its debt levels or increase its equity capital over the years.

The declining trend in the debt-to-capital ratio may indicate improved financial stability and reduced financial risk for Microchip Technology Inc. A lower ratio suggests that the company may have better control over its debt obligations and may be in a stronger position to meet its debt repayments.

Overall, the decreasing debt-to-capital ratio for Microchip Technology Inc over the past five years is a positive indicator of the company's improving financial health and ability to manage its capital structure effectively. However, it is essential to monitor this ratio along with other financial metrics to assess the company's overall financial performance and risk management.