Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Microchip Technology Inc., solvency ratios
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
The solvency profile exhibits a distinct cycle of leverage expansion followed by a period of deleveraging and improved credit coverage. A significant shift in the capital structure occurred in 2019, characterized by a sharp increase in debt-related ratios, which subsequently trended downward through 2022.
- Debt and Capital Structure Ratios
- A substantial increase in leverage is observed in 2019 across all primary debt metrics. The debt to equity ratio spiked from 0.94 in 2018 to 1.95 in 2019, while the debt to assets ratio increased from 0.37 to 0.56 during the same period. From 2020 onward, a consistent reduction in these ratios is evident, with the debt to equity ratio declining to 1.30 and the debt to assets ratio falling to 0.47 by March 31, 2022. The marginal difference between standard debt ratios and those including operating lease liabilities indicates that lease obligations have a negligible impact on the overall solvency position.
- Financial Leverage
- The financial leverage ratio mirrored the trajectory of the debt ratios, rising from 2.35 in 2017 to a peak of 3.47 in 2019. This peak was followed by a gradual decline, reaching 2.75 by March 31, 2022, reflecting a strategic reduction in the proportion of debt used to finance the asset base.
- Coverage Ratios
- Interest and fixed charge coverage ratios displayed high volatility over the analyzed period. Following a strong performance in 2018, both ratios contracted significantly in 2019 and 2020, with interest coverage reaching a minimum of 1.30. However, a robust recovery occurred by 2022, with interest coverage increasing to 6.77 and fixed charge coverage rising to 5.70. This suggests a marked improvement in the capacity to meet fixed financial obligations relative to operating earnings.
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Debt Ratios
Coverage Ratios
Debt to Equity
Microchip Technology Inc., debt to equity calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | 1,322,900) | 608,800) | 1,360,800) | 1,309,900) | 49,952) | |
| Long-term debt excluding current maturities | 7,687,400) | 7,581,200) | 8,873,400) | 8,946,200) | 1,758,400) | 2,900,524) | |
| Total debt | 7,687,400) | 8,904,100) | 9,482,200) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Stockholders’ equity | 5,894,800) | 5,337,100) | 5,585,500) | 5,287,500) | 3,279,800) | 3,270,711) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 1.30 | 1.67 | 1.70 | 1.95 | 0.94 | 0.90 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.05 | 0.04 | — | — | — | — | |
| Analog Devices Inc. | 0.18 | 0.18 | 0.43 | — | — | — | |
| Applied Materials Inc. | 0.45 | 0.45 | 0.52 | — | — | — | |
| Broadcom Inc. | 1.74 | 1.59 | 1.72 | — | — | — | |
| Intel Corp. | 0.41 | 0.40 | — | — | — | — | |
| KLA Corp. | 4.75 | 1.02 | — | — | — | — | |
| Lam Research Corp. | 0.80 | 0.83 | — | — | — | — | |
| Marvell Technology Inc. | 0.29 | 0.14 | — | — | — | — | |
| Micron Technology Inc. | 0.14 | 0.15 | 0.17 | — | — | — | |
| NVIDIA Corp. | 0.41 | 0.41 | — | — | — | — | |
| Qualcomm Inc. | 0.86 | 1.58 | 2.59 | — | — | — | |
| Texas Instruments Inc. | 0.60 | 0.58 | — | — | — | — | |
| Debt to Equity, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.43 | 0.49 | — | — | — | — | |
| Debt to Equity, Industry | |||||||
| Information Technology | 0.70 | 0.83 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 7,687,400 ÷ 5,894,800 = 1.30
2 Click competitor name to see calculations.
The financial period between March 31, 2017, and March 31, 2022, is characterized by a significant shift in the capital structure, featuring a sharp increase in leverage followed by a sustained period of deleveraging.
- Debt Accumulation and Peak Leverage
- A substantial increase in total debt is observed between March 31, 2018, and March 31, 2019, where obligations rose from approximately 3.07 billion to 10.31 billion. This surge caused the debt to equity ratio to peak at 1.95, marking the highest level of financial leverage within the analyzed timeframe.
- Deleveraging Trend
- Following the peak in 2019, a consistent downward trend in total debt occurred through March 31, 2022. Total liabilities decreased steadily from 10.31 billion to 7.69 billion, indicating a systematic reduction of debt obligations over three consecutive fiscal years.
- Equity Growth and Solvency Improvement
- Stockholders' equity grew from 3.27 billion in 2017 to 5.89 billion by March 31, 2022. The simultaneous reduction in total debt and the expansion of the equity base led to a progressive improvement in the solvency position, as evidenced by the debt to equity ratio declining from 1.95 in 2019 to 1.30 by the end of the period.
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Debt to Equity (including Operating Lease Liability)
Microchip Technology Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | 1,322,900) | 608,800) | 1,360,800) | 1,309,900) | 49,952) | |
| Long-term debt excluding current maturities | 7,687,400) | 7,581,200) | 8,873,400) | 8,946,200) | 1,758,400) | 2,900,524) | |
| Total debt | 7,687,400) | 8,904,100) | 9,482,200) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Current portion of operating lease liabilities | 33,800) | 39,800) | 44,500) | —) | —) | —) | |
| Non-current portion of operating lease liabilities (included in Other long-term liabilities) | 128,900) | 125,400) | 94,700) | —) | —) | —) | |
| Total debt (including operating lease liability) | 7,850,100) | 9,069,300) | 9,621,400) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Stockholders’ equity | 5,894,800) | 5,337,100) | 5,585,500) | 5,287,500) | 3,279,800) | 3,270,711) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 1.33 | 1.70 | 1.72 | 1.95 | 0.94 | 0.90 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.05 | 0.10 | — | — | — | — | |
| Analog Devices Inc. | 0.19 | 0.19 | 0.46 | — | — | — | |
| Applied Materials Inc. | 0.48 | 0.47 | 0.54 | — | — | — | |
| Broadcom Inc. | 1.76 | 1.61 | 1.75 | — | — | — | |
| Intel Corp. | 0.42 | 0.40 | — | — | — | — | |
| KLA Corp. | 4.83 | 1.05 | — | — | — | — | |
| Lam Research Corp. | 0.83 | 0.86 | — | — | — | — | |
| Marvell Technology Inc. | 0.30 | 0.16 | — | — | — | — | |
| Micron Technology Inc. | 0.15 | 0.17 | 0.19 | — | — | — | |
| NVIDIA Corp. | 0.44 | 0.46 | — | — | — | — | |
| Qualcomm Inc. | 0.90 | 1.64 | 2.67 | — | — | — | |
| Texas Instruments Inc. | 0.63 | 0.62 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.44 | 0.51 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.76 | 0.90 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 7,850,100 ÷ 5,894,800 = 1.33
2 Click competitor name to see calculations.
An analysis of the solvency profile between March 31, 2017, and March 31, 2022, reveals a significant shift in the capital structure, characterized by a sharp increase in leverage in 2019 followed by a sustained period of deleveraging.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained relatively stable between 2017 and 2018, hovering around US$ 3 billion. A substantial increase occurred by March 31, 2019, where debt surged to US$ 10.31 billion. Following this peak, a consistent downward trend is observed, with total debt reducing to US$ 9.62 billion in 2020, US$ 9.07 billion in 2021, and ending at US$ 7.85 billion by March 31, 2022.
- Stockholders’ Equity Evolution
- Equity levels showed a general upward trajectory over the analyzed period. Starting at US$ 3.27 billion in 2017, equity grew to US$ 5.29 billion by 2019. While a slight contraction occurred in 2021, the equity base reached its highest point in the series by March 31, 2022, at US$ 5.89 billion.
- Debt to Equity Ratio Analysis
- The debt to equity ratio reflects the volatility in debt levels. The ratio moved from 0.90 in 2017 to 0.94 in 2018, before spiking to a peak of 1.95 in 2019, indicating a period of high leverage. Subsequently, the ratio declined steadily to 1.72 in 2020 and 1.70 in 2021, eventually dropping to 1.33 by March 31, 2022. This trend demonstrates a systematic reduction in the reliance on debt relative to equity since the 2019 peak.
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Debt to Capital
Microchip Technology Inc., debt to capital calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | 1,322,900) | 608,800) | 1,360,800) | 1,309,900) | 49,952) | |
| Long-term debt excluding current maturities | 7,687,400) | 7,581,200) | 8,873,400) | 8,946,200) | 1,758,400) | 2,900,524) | |
| Total debt | 7,687,400) | 8,904,100) | 9,482,200) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Stockholders’ equity | 5,894,800) | 5,337,100) | 5,585,500) | 5,287,500) | 3,279,800) | 3,270,711) | |
| Total capital | 13,582,200) | 14,241,200) | 15,067,700) | 15,594,500) | 6,348,100) | 6,221,187) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.57 | 0.63 | 0.63 | 0.66 | 0.48 | 0.47 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.04 | 0.04 | — | — | — | — | |
| Analog Devices Inc. | 0.15 | 0.15 | 0.30 | — | — | — | |
| Applied Materials Inc. | 0.31 | 0.31 | 0.34 | — | — | — | |
| Broadcom Inc. | 0.64 | 0.61 | 0.63 | — | — | — | |
| Intel Corp. | 0.29 | 0.29 | — | — | — | — | |
| KLA Corp. | 0.83 | 0.50 | — | — | — | — | |
| Lam Research Corp. | 0.44 | 0.45 | — | — | — | — | |
| Marvell Technology Inc. | 0.22 | 0.12 | — | — | — | — | |
| Micron Technology Inc. | 0.12 | 0.13 | 0.15 | — | — | — | |
| NVIDIA Corp. | 0.29 | 0.29 | — | — | — | — | |
| Qualcomm Inc. | 0.46 | 0.61 | 0.72 | — | — | — | |
| Texas Instruments Inc. | 0.37 | 0.37 | — | — | — | — | |
| Debt to Capital, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.30 | 0.33 | — | — | — | — | |
| Debt to Capital, Industry | |||||||
| Information Technology | 0.41 | 0.45 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 7,687,400 ÷ 13,582,200 = 0.57
2 Click competitor name to see calculations.
An analysis of the solvency profile from 2017 to 2022 reveals a significant shift in leverage, characterized by a sharp increase in debt obligations followed by a consistent period of deleveraging. The most substantial change occurred between 2018 and 2019, where a surge in total debt fundamentally altered the capital structure.
- Total Debt Trends
- Total debt remained relatively stable between March 31, 2017, and March 31, 2018, at approximately 2.95 billion and 3.07 billion respectively. A significant escalation occurred by March 31, 2019, with debt rising to 10.31 billion. Following this peak, a steady downward trajectory is observed, with total debt decreasing sequentially over the next three years to reach 7.69 billion by March 31, 2022.
- Total Capital Evolution
- Total capital mirrored the trend seen in debt, moving from 6.22 billion in 2017 to 15.59 billion in 2019. After reaching this maximum, total capital experienced a gradual decline, closing at 13.58 billion by March 31, 2022. This indicates that the expansion of the capital base was primarily driven by the increase in debt rather than equity growth during the 2019 spike.
- Debt to Capital Ratio Analysis
- The debt to capital ratio was stable at 0.47 and 0.48 during the 2017 and 2018 fiscal years. The ratio peaked at 0.66 in 2019, reflecting a higher reliance on borrowed funds. From 2020 to 2022, the ratio improved, moving from 0.63 down to 0.57. While the ratio has decreased from its peak, it remains elevated compared to the pre-2019 baseline, indicating a permanently higher leverage position relative to the start of the analyzed period.
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Debt to Capital (including Operating Lease Liability)
Microchip Technology Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | 1,322,900) | 608,800) | 1,360,800) | 1,309,900) | 49,952) | |
| Long-term debt excluding current maturities | 7,687,400) | 7,581,200) | 8,873,400) | 8,946,200) | 1,758,400) | 2,900,524) | |
| Total debt | 7,687,400) | 8,904,100) | 9,482,200) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Current portion of operating lease liabilities | 33,800) | 39,800) | 44,500) | —) | —) | —) | |
| Non-current portion of operating lease liabilities (included in Other long-term liabilities) | 128,900) | 125,400) | 94,700) | —) | —) | —) | |
| Total debt (including operating lease liability) | 7,850,100) | 9,069,300) | 9,621,400) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Stockholders’ equity | 5,894,800) | 5,337,100) | 5,585,500) | 5,287,500) | 3,279,800) | 3,270,711) | |
| Total capital (including operating lease liability) | 13,744,900) | 14,406,400) | 15,206,900) | 15,594,500) | 6,348,100) | 6,221,187) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.57 | 0.63 | 0.63 | 0.66 | 0.48 | 0.47 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.05 | 0.09 | — | — | — | — | |
| Analog Devices Inc. | 0.16 | 0.16 | 0.31 | — | — | — | |
| Applied Materials Inc. | 0.32 | 0.32 | 0.35 | — | — | — | |
| Broadcom Inc. | 0.64 | 0.62 | 0.64 | — | — | — | |
| Intel Corp. | 0.30 | 0.29 | — | — | — | — | |
| KLA Corp. | 0.83 | 0.51 | — | — | — | — | |
| Lam Research Corp. | 0.45 | 0.46 | — | — | — | — | |
| Marvell Technology Inc. | 0.23 | 0.14 | — | — | — | — | |
| Micron Technology Inc. | 0.13 | 0.14 | 0.16 | — | — | — | |
| NVIDIA Corp. | 0.31 | 0.31 | — | — | — | — | |
| Qualcomm Inc. | 0.47 | 0.62 | 0.73 | — | — | — | |
| Texas Instruments Inc. | 0.39 | 0.38 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.31 | 0.34 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.43 | 0.47 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 7,850,100 ÷ 13,744,900 = 0.57
2 Click competitor name to see calculations.
The solvency profile of the entity underwent a significant transformation between 2017 and 2022, characterized by a sharp increase in leverage in 2019 followed by a consistent period of deleveraging. The capital structure shifted from a relatively low-debt position to a higher reliance on borrowed funds, before beginning a gradual return toward a more balanced capital composition.
- Debt and Capital Expansion
- A substantial increase in financial leverage occurred between March 31, 2018, and March 31, 2019. Total debt, including operating lease liabilities, rose from US$ 3,068,300 thousand to US$ 10,307,000 thousand. This surge was accompanied by an increase in total capital, which expanded from US$ 6,348,100 thousand to US$ 15,594,500 thousand in the same period.
- Debt to Capital Ratio Volatility
- The debt to capital ratio remained stable at 0.47 and 0.48 during 2017 and 2018, respectively. The ratio peaked at 0.66 in 2019, reflecting a significant shift in the financing mix toward debt. Following this peak, the ratio remained steady at 0.63 throughout 2020 and 2021, before declining to 0.57 by March 31, 2022.
- Deleveraging Trend
- From 2020 through 2022, a consistent downward trend in total debt is observed. Obligations were reduced from US$ 9,621,400 thousand in 2020 to US$ 7,850,100 thousand by 2022. This systematic reduction in debt, alongside a decrease in total capital to US$ 13,744,900 thousand, indicates a strategic effort to reduce the entity's long-term financial risk and improve solvency.
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Debt to Assets
Microchip Technology Inc., debt to assets calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | 1,322,900) | 608,800) | 1,360,800) | 1,309,900) | 49,952) | |
| Long-term debt excluding current maturities | 7,687,400) | 7,581,200) | 8,873,400) | 8,946,200) | 1,758,400) | 2,900,524) | |
| Total debt | 7,687,400) | 8,904,100) | 9,482,200) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Total assets | 16,199,500) | 16,478,800) | 17,426,100) | 18,350,000) | 8,257,200) | 7,686,881) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.47 | 0.54 | 0.54 | 0.56 | 0.37 | 0.38 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.04 | 0.03 | — | — | — | — | |
| Analog Devices Inc. | 0.13 | 0.13 | 0.24 | — | — | — | |
| Applied Materials Inc. | 0.20 | 0.21 | 0.24 | — | — | — | |
| Broadcom Inc. | 0.54 | 0.53 | 0.54 | — | — | — | |
| Intel Corp. | 0.23 | 0.23 | — | — | — | — | |
| KLA Corp. | 0.53 | 0.34 | — | — | — | — | |
| Lam Research Corp. | 0.29 | 0.31 | — | — | — | — | |
| Marvell Technology Inc. | 0.21 | 0.11 | — | — | — | — | |
| Micron Technology Inc. | 0.10 | 0.12 | 0.12 | — | — | — | |
| NVIDIA Corp. | 0.25 | 0.24 | — | — | — | — | |
| Qualcomm Inc. | 0.32 | 0.38 | 0.44 | — | — | — | |
| Texas Instruments Inc. | 0.32 | 0.31 | — | — | — | — | |
| Debt to Assets, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.24 | 0.26 | — | — | — | — | |
| Debt to Assets, Industry | |||||||
| Information Technology | 0.26 | 0.29 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 7,687,400 ÷ 16,199,500 = 0.47
2 Click competitor name to see calculations.
The solvency profile of the organization underwent a significant shift between 2017 and 2022, characterized by a substantial expansion of the balance sheet followed by a period of gradual contraction and deleveraging.
- Balance Sheet Expansion (2017–2019)
- A sharp increase in financial leverage occurred in 2019, with total debt rising from approximately 3.07 billion US dollars in 2018 to 10.31 billion US dollars. This increase was mirrored by a corresponding rise in total assets, which surged from 8.26 billion US dollars to 18.35 billion US dollars in the same period, suggesting a large-scale capital investment or acquisition event.
- Deleveraging Trend (2020–2022)
- Following the peak in 2019, a consistent downward trend in total debt is observed. Total debt decreased annually from 10.31 billion US dollars in 2019 to 7.69 billion US dollars by March 31, 2022. Total assets also experienced a steady decline during this period, moving from 18.35 billion US dollars to 16.20 billion US dollars, indicating a contraction in the overall size of the balance sheet.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained stable between 0.37 and 0.38 from 2017 to 2018 before increasing to 0.56 in 2019. This peak indicates that over half of the organization's assets were financed through debt. From 2020 onward, the ratio began to decline, reaching 0.47 by 2022, which reflects an improvement in the solvency position and a reduced reliance on borrowed capital relative to total assets.
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Debt to Assets (including Operating Lease Liability)
Microchip Technology Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current portion of long-term debt | —) | 1,322,900) | 608,800) | 1,360,800) | 1,309,900) | 49,952) | |
| Long-term debt excluding current maturities | 7,687,400) | 7,581,200) | 8,873,400) | 8,946,200) | 1,758,400) | 2,900,524) | |
| Total debt | 7,687,400) | 8,904,100) | 9,482,200) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Current portion of operating lease liabilities | 33,800) | 39,800) | 44,500) | —) | —) | —) | |
| Non-current portion of operating lease liabilities (included in Other long-term liabilities) | 128,900) | 125,400) | 94,700) | —) | —) | —) | |
| Total debt (including operating lease liability) | 7,850,100) | 9,069,300) | 9,621,400) | 10,307,000) | 3,068,300) | 2,950,476) | |
| Total assets | 16,199,500) | 16,478,800) | 17,426,100) | 18,350,000) | 8,257,200) | 7,686,881) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.48 | 0.55 | 0.55 | 0.56 | 0.37 | 0.38 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.04 | 0.06 | — | — | — | — | |
| Analog Devices Inc. | 0.14 | 0.14 | 0.25 | — | — | — | |
| Applied Materials Inc. | 0.22 | 0.22 | 0.26 | — | — | — | |
| Broadcom Inc. | 0.55 | 0.53 | 0.55 | — | — | — | |
| Intel Corp. | 0.23 | 0.23 | — | — | — | — | |
| KLA Corp. | 0.54 | 0.35 | — | — | — | — | |
| Lam Research Corp. | 0.30 | 0.33 | — | — | — | — | |
| Marvell Technology Inc. | 0.21 | 0.12 | — | — | — | — | |
| Micron Technology Inc. | 0.11 | 0.12 | 0.13 | — | — | — | |
| NVIDIA Corp. | 0.27 | 0.27 | — | — | — | — | |
| Qualcomm Inc. | 0.33 | 0.40 | 0.46 | — | — | — | |
| Texas Instruments Inc. | 0.34 | 0.33 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.25 | 0.27 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.29 | 0.31 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 7,850,100 ÷ 16,199,500 = 0.48
2 Click competitor name to see calculations.
The capital structure experienced a significant shift between March 31, 2018, and March 31, 2019, characterized by a substantial and simultaneous increase in both total debt and total assets. Following this peak in 2019, a gradual trend of deleveraging has been observed, with a consistent reduction in total liabilities relative to the asset base through March 31, 2022.
- Debt and Asset Scale Evolution
- Total debt, including operating lease liabilities, remained relatively stable at approximately US$ 3 billion during 2017 and 2018 before surging to US$ 10.31 billion in 2019. This expansion was mirrored by total assets, which grew from US$ 8.26 billion in 2018 to US$ 18.35 billion in 2019. After 2019, total assets entered a period of moderate decline, ending at US$ 16.20 billion in 2022, while total debt decreased more aggressively to US$ 7.85 billion over the same period.
- Debt to Assets Ratio Analysis
- The solvency ratio remained low and stable at 0.38 and 0.37 during the 2017 and 2018 fiscal years. A sharp increase to 0.56 occurred in 2019, indicating that debt financed a larger proportion of the asset base. This ratio remained plateaued at approximately 0.55 through 2020 and 2021 before declining to 0.48 by March 31, 2022.
- Solvency Trend Interpretation
- The data indicates a strategic increase in leverage in 2019, followed by a concerted effort to reduce the debt burden. The reduction of the Debt to Assets ratio from 0.56 to 0.48 suggests an improvement in the solvency position, as total debt was reduced by approximately 23.8% between 2019 and 2022, while total assets decreased by only 11.7% in the same timeframe.
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Financial Leverage
Microchip Technology Inc., financial leverage calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Total assets | 16,199,500) | 16,478,800) | 17,426,100) | 18,350,000) | 8,257,200) | 7,686,881) | |
| Stockholders’ equity | 5,894,800) | 5,337,100) | 5,585,500) | 5,287,500) | 3,279,800) | 3,270,711) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 2.75 | 3.09 | 3.12 | 3.47 | 2.52 | 2.35 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 1.23 | 1.66 | — | — | — | — | |
| Analog Devices Inc. | 1.38 | 1.38 | 1.79 | — | — | — | |
| Applied Materials Inc. | 2.19 | 2.11 | 2.11 | — | — | — | |
| Broadcom Inc. | 3.23 | 3.03 | 3.18 | — | — | — | |
| Intel Corp. | 1.80 | 1.77 | — | — | — | — | |
| KLA Corp. | 8.99 | 3.04 | — | — | — | — | |
| Lam Research Corp. | 2.74 | 2.64 | — | — | — | — | |
| Marvell Technology Inc. | 1.41 | 1.28 | — | — | — | — | |
| Micron Technology Inc. | 1.33 | 1.34 | 1.38 | — | — | — | |
| NVIDIA Corp. | 1.66 | 1.70 | — | — | — | — | |
| Qualcomm Inc. | 2.72 | 4.14 | 5.86 | — | — | — | |
| Texas Instruments Inc. | 1.87 | 1.85 | — | — | — | — | |
| Financial Leverage, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 1.77 | 1.87 | — | — | — | — | |
| Financial Leverage, Industry | |||||||
| Information Technology | 2.65 | 2.87 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 16,199,500 ÷ 5,894,800 = 2.75
2 Click competitor name to see calculations.
Between March 2017 and March 2022, the company's capital structure underwent a significant transformation, characterized by a sharp expansion of the balance sheet in 2019 followed by a sustained period of deleveraging and asset contraction.
- Total Assets
- A substantial increase in total assets is observed between March 2018 and March 2019, where assets rose from approximately 8.26 billion USD to 18.35 billion USD. Following this peak, a consistent downward trend occurred over the subsequent three years, with total assets declining to 16.20 billion USD by March 2022.
- Stockholders' Equity
- Equity levels remained stable from 2017 to 2018 before experiencing a significant increase in 2019. From March 2019 onward, stockholders' equity exhibited a general growth pattern, rising from 5.29 billion USD to 5.89 billion USD by March 2022, despite the overall decline in total assets during the same period.
- Financial Leverage
- The financial leverage ratio increased from 2.35 in 2017 to a peak of 3.47 in 2019, indicating a period of increased financial risk and higher reliance on debt to fund asset growth. Since 2019, the ratio has trended downward, reaching 2.75 by March 2022. This decline is a result of the simultaneous reduction in total assets and the increase in stockholders' equity, reflecting a strengthening solvency position and a reduction in financial gearing.
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Interest Coverage
Microchip Technology Inc., interest coverage calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 1,285,500) | 349,400) | 570,600) | 355,900) | 255,400) | 164,639) | |
| Less: Net loss from discontinued operations | —) | —) | —) | —) | —) | (5,953) | |
| Add: Income tax expense | 197,000) | (9,900) | (420,200) | (151,400) | 481,900) | (80,805) | |
| Add: Interest expense | 257,000) | 356,900) | 497,300) | 502,900) | 199,000) | 146,346) | |
| Earnings before interest and tax (EBIT) | 1,739,500) | 696,400) | 647,700) | 707,400) | 936,300) | 236,133) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 6.77 | 1.95 | 1.30 | 1.41 | 4.71 | 1.61 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 14.61 | 109.09 | — | — | — | — | |
| Analog Devices Inc. | 16.46 | 8.19 | 7.79 | — | — | — | |
| Applied Materials Inc. | 34.33 | 29.69 | 18.36 | — | — | — | |
| Broadcom Inc. | 8.16 | 4.59 | 2.37 | — | — | — | |
| Intel Corp. | 16.66 | 37.35 | — | — | — | — | |
| KLA Corp. | 22.76 | 16.00 | — | — | — | — | |
| Lam Research Corp. | 29.11 | 21.95 | — | — | — | — | |
| Marvell Technology Inc. | -2.47 | -3.65 | — | — | — | — | |
| Micron Technology Inc. | 51.66 | 35.18 | 16.41 | — | — | — | |
| NVIDIA Corp. | 43.12 | 24.96 | — | — | — | — | |
| Qualcomm Inc. | 31.61 | 19.38 | 10.50 | — | — | — | |
| Texas Instruments Inc. | 47.88 | 49.47 | — | — | — | — | |
| Interest Coverage, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 20.45 | 18.07 | — | — | — | — | |
| Interest Coverage, Industry | |||||||
| Information Technology | 22.18 | 19.66 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 1,739,500 ÷ 257,000 = 6.77
2 Click competitor name to see calculations.
The interest coverage analysis for the period ending March 31, 2017, through March 31, 2022, reveals a period of significant volatility followed by a substantial improvement in solvency strength. The company experienced fluctuations in its ability to service debt, characterized by a sharp decline in coverage between 2018 and 2020, and a subsequent strong recovery by 2022.
- Earnings Before Interest and Tax (EBIT) Trends
- EBIT exhibited considerable variance over the six-year period. Following an initial surge from 236.1 million in 2017 to 936.3 million in 2018, earnings experienced a moderate decline, stabilizing between 647.7 million and 707.4 million from 2019 to 2021. A significant expansion occurred in 2022, with EBIT reaching a peak of 1.74 billion, representing a substantial increase in operational profitability.
- Interest Expense Patterns
- Interest expenses remained relatively stable in the first two years but spiked sharply in 2019, rising to 502.9 million. This elevated expense level persisted through 2020 before entering a period of consistent reduction, falling to 356.9 million in 2021 and further decreasing to 257.0 million by 2022.
- Interest Coverage Ratio Analysis
- The interest coverage ratio reflects the combined impact of EBIT volatility and interest cost fluctuations. The ratio peaked early in 2018 at 4.71, but dropped precipitously to 1.41 in 2019 and 1.30 in 2020, indicating a narrowed margin of safety for debt servicing. This compression was driven by the simultaneous increase in interest expenses and the contraction of EBIT. However, a strong upward trajectory was established in 2021 (1.95) and culminated in 2022 with a ratio of 6.77, the highest in the observed period. This final increase indicates a significantly strengthened solvency position, driven by the dual effect of record-high earnings and reduced interest obligations.
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Fixed Charge Coverage
Microchip Technology Inc., fixed charge coverage calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 1,285,500) | 349,400) | 570,600) | 355,900) | 255,400) | 164,639) | |
| Less: Net loss from discontinued operations | —) | —) | —) | —) | —) | (5,953) | |
| Add: Income tax expense | 197,000) | (9,900) | (420,200) | (151,400) | 481,900) | (80,805) | |
| Add: Interest expense | 257,000) | 356,900) | 497,300) | 502,900) | 199,000) | 146,346) | |
| Earnings before interest and tax (EBIT) | 1,739,500) | 696,400) | 647,700) | 707,400) | 936,300) | 236,133) | |
| Add: Operating lease expense | 58,400) | 63,100) | 70,400) | 50,900) | 30,000) | 35,400) | |
| Earnings before fixed charges and tax | 1,797,900) | 759,500) | 718,100) | 758,300) | 966,300) | 271,533) | |
| Interest expense | 257,000) | 356,900) | 497,300) | 502,900) | 199,000) | 146,346) | |
| Operating lease expense | 58,400) | 63,100) | 70,400) | 50,900) | 30,000) | 35,400) | |
| Fixed charges | 315,400) | 420,000) | 567,700) | 553,800) | 229,000) | 181,746) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 5.70 | 1.81 | 1.26 | 1.37 | 4.22 | 1.49 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 6.82 | 36.00 | — | — | — | — | |
| Analog Devices Inc. | 12.87 | 6.64 | 6.48 | — | — | — | |
| Applied Materials Inc. | 24.67 | 22.50 | 14.48 | — | — | — | |
| Broadcom Inc. | 6.55 | 3.70 | 1.92 | — | — | — | |
| Intel Corp. | 7.34 | 16.56 | — | — | — | — | |
| KLA Corp. | 18.72 | 13.03 | — | — | — | — | |
| Lam Research Corp. | 21.44 | 17.80 | — | — | — | — | |
| Marvell Technology Inc. | -1.40 | -1.75 | — | — | — | — | |
| Micron Technology Inc. | 31.49 | 22.49 | 11.10 | — | — | — | |
| NVIDIA Corp. | 25.61 | 14.40 | — | — | — | — | |
| Qualcomm Inc. | 22.52 | 14.48 | 8.30 | — | — | — | |
| Texas Instruments Inc. | 36.70 | 36.25 | — | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 13.92 | 12.49 | — | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Information Technology | 13.23 | 12.08 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 1,797,900 ÷ 315,400 = 5.70
2 Click competitor name to see calculations.
The solvency profile over the six-year period demonstrates significant volatility in fixed charge coverage, characterized by an initial surge, a subsequent period of contraction, and a strong recovery by the end of the analyzed timeframe. The overall trend indicates a substantial improvement in the capacity to service fixed obligations as of March 31, 2022.
- Earnings Before Fixed Charges and Tax (EBFCT)
- Earnings exhibited a general upward trajectory with significant fluctuations, rising from US$ 271.5 million in 2017 to US$ 1.798 billion in 2022. A sharp increase was observed in 2018, followed by a period of relative stagnation between 2019 and 2021, where earnings remained within the US$ 718 million to US$ 760 million range before surging in the final year.
- Fixed Charge Obligations
- Fixed charges saw a period of rapid expansion between 2018 and 2020, increasing from US$ 229 million to a peak of US$ 567.7 million. This trend reversed after March 31, 2020, with charges declining steadily to US$ 315.4 million by 2022, thereby reducing the company's mandatory financial outflows.
- Fixed Charge Coverage Ratio
- The coverage ratio reflects a U-shaped recovery pattern. After peaking at 4.22 in 2018, the ratio declined to a low of 1.26 in 2020, indicating a period of tightened solvency margins where earnings only marginally exceeded fixed obligations. However, the ratio improved sharply to 5.70 by 2022, a result of the combined effect of record-high earnings and reduced fixed charges.
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