Microchip Technology Inc (MCHP)

Financial leverage ratio

		Mar 31, 2025	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021
Total assets	US$ in thousands	15,374,600	15,873,200	16,370,300	16,199,500	16,478,800
Total stockholders’ equity	US$ in thousands	7,078,300	6,657,800	6,513,600	5,894,800	5,337,100
Financial leverage ratio		2.17	2.38	2.51	2.75	3.09

March 31, 2025 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $15,374,600K ÷ $7,078,300K
= 2.17

The financial leverage ratio of Microchip Technology Inc has shown a declining trend over the past five years, decreasing from 3.09 in March 2021 to 2.17 in March 2025. This indicates that the company's reliance on debt to finance its operations has been gradually reducing. A lower financial leverage ratio suggests a more conservative capital structure, with a higher proportion of equity financing relative to debt. This can be favorable as it signifies lower financial risk and potential stability in the company's financial position. However, it is essential to also consider the overall business strategy and industry benchmarks when evaluating the implications of changes in the financial leverage ratio over time.