Microchip Technology Inc (MCHP)

Interest coverage

		Mar 31, 2025	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	394,900	648,100	1,156,000	1,892,200	2,575,300	3,172,200	3,456,700	3,329,300	3,121,400	2,808,300	2,496,900	2,067,100	1,739,500	1,424,900	1,170,900	1,023,400	842,700	781,500	662,200	667,100
Interest expense (ttm)	US$ in thousands	187,600	242,700	223,200	210,900	198,300	190,700	194,300	200,800	203,900	214,200	223,500	235,000	257,000	277,200	301,600	330,100	356,900	394,300	427,500	463,800
Interest coverage		2.11	2.67	5.18	8.97	12.99	16.63	17.79	16.58	15.31	13.11	11.17	8.80	6.77	5.14	3.88	3.10	2.36	1.98	1.55	1.44

March 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $394,900K ÷ $187,600K
= 2.11

Microchip Technology Inc's interest coverage ratio has shown a positive trend over the available time period. The interest coverage ratio has increased steadily from 1.44 in June 2020 to a peak of 17.79 in September 2023, indicating the company's improving ability to cover its interest expenses with its operating income. However, there was a notable decline in the interest coverage ratio to 2.11 in March 2025, suggesting a potential decrease in the company's ability to meet its interest payments.

Overall, the interest coverage ratio for Microchip Technology Inc has been generally healthy throughout the period, with ample income to cover its interest expenses. Investors and creditors may view this positively as a higher interest coverage ratio signifies lower financial risk for the company. It is essential for stakeholders to monitor the trend in interest coverage ratio to assess the company's financial health and ability to meet its debt obligations.