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MCHP (Microchip Technology) Altman Z-Score : 4.08 (As of Oct. 31, 2024)


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What is Microchip Technology Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Good Sign:

Altman Z-score of 4.08 is strong.

Microchip Technology has a Altman Z-Score of 4.08, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Microchip Technology's Altman Z-Score or its related term are showing as below:

MCHP' s Altman Z-Score Range Over the Past 10 Years
Min: 1.45   Med: 3.36   Max: 4.99
Current: 4.08

During the past 13 years, Microchip Technology's highest Altman Z-Score was 4.99. The lowest was 1.45. And the median was 3.36.


Microchip Technology Altman Z-Score Historical Data

The historical data trend for Microchip Technology's Altman Z-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Microchip Technology Altman Z-Score Chart

Microchip Technology Annual Data
Trend Mar15 Mar16 Mar17 Mar18 Mar19 Mar20 Mar21 Mar22 Mar23 Mar24
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.58 3.02 3.64 4.41 4.78

Microchip Technology Quarterly Data
Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.75 4.42 4.99 4.78 4.63

Competitive Comparison of Microchip Technology's Altman Z-Score

For the Semiconductors subindustry, Microchip Technology's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Microchip Technology's Altman Z-Score Distribution in the Semiconductors Industry

For the Semiconductors industry and Technology sector, Microchip Technology's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Microchip Technology's Altman Z-Score falls into.



Microchip Technology Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

Microchip Technology's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.0902+1.4*0.4196+3.3*0.119+0.6*4.2983+1.0*0.4159
=4.08

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Jun. 2024:
Total Assets was $15,840 Mil.
Total Current Assets was $2,948 Mil.
Total Current Liabilities was $1,520 Mil.
Retained Earnings was $6,646 Mil.
Pre-Tax Income was 161.8 + 199.7 + 484.3 + 833.6 = $1,679 Mil.
Interest Expense was -59.8 + -53.5 + -47.5 + -45 = $-206 Mil.
Revenue was 1241.3 + 1325.8 + 1765.7 + 2254.3 = $6,587 Mil.
Market Cap (Today) was $40,549 Mil.
Total Liabilities was $9,434 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(2948.3 - 1520.3)/15839.7
=0.0902

X2=Retained Earnings/Total Assets
=6646.2/15839.7
=0.4196

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(1679.4 - -205.8)/15839.7
=0.119

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=40549.054/9433.7
=4.2983

X5=Revenue/Total Assets
=6587.1/15839.7
=0.4159

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Microchip Technology has a Altman Z-Score of 4.08 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Microchip Technology  (NAS:MCHP) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Microchip Technology Altman Z-Score Related Terms

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Microchip Technology Business Description

Address
2355 West Chandler Boulevard, Chandler, AZ, USA, 85224-6199
Microchip Technology became an independent company in 1989 when it was spun off from General Instrument. More than half of revenue comes from MCUs, which are used in a wide array of electronic devices from remote controls to garage door openers to power windows in autos. The company's strength lies in lower-end 8-bit MCUs that are suitable for a wider range of less technologically advanced devices, but the firm has expanded its presence in higher-end MCUs and analog chips as well.
Executives
James Eric Bjornholt officer: VP and CFO MICROCHIP TECHNOLOGY INCORPORATED, 2355 WEST CHANDLER BOULEVARD, CHANDLER AZ 85224-6199
Matthew W Chapman director 400 SW SIXTH AVENUE, SUITE 200, PORTLAND OR 97204
Karlton D Johnson director C/O MICROCHIP TECHNOLOGY INCORPORATED, 2355 W. CHANDLER BOULEVARD, CHANDLER AZ 85224-6199
Stephen V Drehobl officer: VP, Security, MCU & Tech Div.
Steve Sanghi director, officer: President, CEO, Chairman 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
Robert A. Rango director 5300 CALIFORNIA AVENUE, IRVINE CA 92617
Richard J Simoncic officer: VP, Microperipheral Prod Div 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
Mitchell R Little officer: VP, WW Sales and Appns. 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
Ganesh Moorthy officer: VP, MCU and Auto. Div. MICROCHIP, 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
Wade F Meyercord director 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
L B Day director 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
Karen Marie Rapp director C/O NATIONAL INSTRUMENTS CORPORATION, 11500 NORTH MOPAC, AUSTIN TX 78759
Esther Johnson director 8731 S 600 W, CLAYPOOL IN 46510
Hugo Martinez Albert J director 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199
David S Lambert officer: VP, Fab Operations 2355 W CHANDLER BLVD, CHANDLER AZ 85224-6199