Microchip Technology Inc (MCHP)
Solvency ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.43 | 0.29 | 0.39 | 0.32 | 0.25 | 0.27 | 0.28 | 0.31 | 0.41 | 0.39 | 0.47 | 0.47 | 0.49 | 0.51 | 0.52 | 0.46 | 0.46 | 0.49 | 0.45 | 0.51 |
| Debt-to-capital ratio | 0.53 | 0.42 | 0.49 | 0.43 | 0.36 | 0.39 | 0.40 | 0.44 | 0.51 | 0.51 | 0.56 | 0.57 | 0.58 | 0.59 | 0.61 | 0.59 | 0.59 | 0.60 | 0.58 | 0.61 |
| Debt-to-equity ratio | 1.12 | 0.71 | 0.96 | 0.75 | 0.57 | 0.63 | 0.68 | 0.77 | 1.04 | 1.03 | 1.27 | 1.30 | 1.36 | 1.44 | 1.54 | 1.42 | 1.44 | 1.50 | 1.41 | 1.59 |
| 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 |
Microchip Technology Inc's solvency ratios indicate the company's ability to meet its long-term obligations.
1. Debt-to-assets ratio: Generally decreasing from 0.51 in March 2020 to 0.43 in December 2024, indicating that the company's proportion of debt relative to its total assets has been on a declining trend, which is a positive sign for creditors as it shows lower financial risk.
2. Debt-to-capital ratio: Fluctuating but relatively stable around 0.6 in 2020 and gradually decreasing to around 0.49 in December 2024. This indicates that the company has been able to reduce its reliance on debt financing in relation to its total capital over the period.
3. Debt-to-equity ratio: Generally declining from 1.59 in March 2020 to 1.12 in December 2024, showing a decreasing reliance on debt funding in relation to equity. The declining trend implies a strengthening financial position and lower risk for equity investors.
4. Financial leverage ratio: Decreasing from 3.12 in March 2020 to 2.59 in December 2024, the ratio shows that the company has been reducing its financial leverage over time. This indicates a decreasing reliance on debt to finance operations, which could lower the overall financial risk for the company.
Overall, the solvency ratios suggest that Microchip Technology Inc has been managing its long-term debt levels effectively, reducing its reliance on debt financing, and strengthening its financial position over the analyzed period up to December 2024.
Coverage ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 5.85 | 5.16 | 8.89 | 12.93 | 16.56 | 17.71 | 16.50 | 15.27 | 13.08 | 11.14 | 8.80 | 6.77 | 5.14 | 3.40 | 2.66 | 1.95 | 1.61 | 1.55 | 1.43 | 1.30 |
Interest coverage ratio measures a company's ability to meet interest payments on its debt obligations. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
For Microchip Technology Inc, the interest coverage ratio has shown an improving trend over the analyzed periods from March 31, 2020, to December 31, 2024. Starting at 1.30 in March 2020, the ratio increased steadily, reaching a peak of 17.71 in September 30, 2023, before declining slightly to 12.93 in March 31, 2024.
The significant increase in the interest coverage ratio over the years indicates that Microchip Technology Inc has been able to generate sufficient earnings to cover its interest expenses comfortably, reflecting a healthier financial position.
It is important for investors and stakeholders to monitor the interest coverage ratio continuously to assess the company's ability to meet its debt obligations and manage financial risks effectively.