Microchip Technology Inc (MCHP)

Financial leverage ratio

		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
Total assets	US$ in thousands	15,632,200	15,622,300	15,839,700	15,873,200	16,143,000	16,601,400	16,494,600	16,370,300	16,116,100	16,141,100	16,208,400	16,199,500	16,047,200	16,215,000	16,277,800	16,478,800	16,576,100	16,770,900	17,028,100	17,426,100
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
Financial leverage ratio		2.59	2.49	2.47	2.38	2.28	2.38	2.41	2.51	2.55	2.64	2.71	2.75	2.77	2.84	2.95	3.09	3.13	3.08	3.10	3.12

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $15,632,200K ÷ $6,031,500K
= 2.59

The financial leverage ratio of Microchip Technology Inc has been declining steadily over the past few years, indicating a decreasing reliance on debt to finance its operations. The ratio stood at 3.12 as of March 31, 2020, and gradually decreased to 2.59 as of December 31, 2024. This downward trend suggests that the company has been reducing its financial risk by relying more on equity financing rather than debt. Lower financial leverage ratios generally indicate a healthier financial position as they imply lower interest payments, lower bankruptcy risk, and better debt repayment capacity. It seems that Microchip Technology Inc has been effectively managing its capital structure and maintaining a conservative approach towards debt.