Intrinsic value of Microchip Technology Incorporated - MCHP

Previous Close

$92.31

  Intrinsic Value

$64.66

stock screener

  Rating & Target

sell

-30%

Previous close

$92.31

 
Intrinsic value

$64.66

 
Up/down potential

-30%

 
Rating

sell

We calculate the intrinsic value of MCHP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 21.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  38.30
  34.97
  31.97
  29.28
  26.85
  24.66
  22.70
  20.93
  19.33
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
Revenue, $m
  5,506
  7,431
  9,807
  12,678
  16,082
  20,048
  24,599
  29,746
  35,498
  41,852
  48,804
  56,345
  64,461
  73,140
  82,369
  92,135
  102,427
  113,236
  124,558
  136,389
  148,730
  161,586
  174,964
  188,876
  203,337
  218,364
  233,981
  250,211
  267,082
  284,625
Variable operating expenses, $m
  4,908
  6,486
  8,433
  10,786
  13,575
  16,826
  20,555
  24,773
  29,487
  34,694
  39,995
  46,174
  52,826
  59,939
  67,502
  75,505
  83,939
  92,797
  102,076
  111,771
  121,885
  132,420
  143,383
  154,784
  166,635
  178,950
  191,748
  205,048
  218,874
  233,251
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  4,908
  6,486
  8,433
  10,786
  13,575
  16,826
  20,555
  24,773
  29,487
  34,694
  39,995
  46,174
  52,826
  59,939
  67,502
  75,505
  83,939
  92,797
  102,076
  111,771
  121,885
  132,420
  143,383
  154,784
  166,635
  178,950
  191,748
  205,048
  218,874
  233,251
Operating income, $m
  598
  945
  1,374
  1,892
  2,507
  3,223
  4,044
  4,973
  6,011
  7,158
  8,809
  10,170
  11,635
  13,202
  14,867
  16,630
  18,488
  20,439
  22,482
  24,618
  26,845
  29,166
  31,581
  34,092
  36,702
  39,414
  42,233
  45,162
  48,208
  51,374
EBITDA, $m
  1,482
  2,001
  2,641
  3,414
  4,330
  5,398
  6,623
  8,009
  9,558
  11,269
  13,140
  15,171
  17,356
  19,693
  22,178
  24,807
  27,578
  30,489
  33,537
  36,722
  40,045
  43,507
  47,109
  50,854
  54,748
  58,794
  62,999
  67,369
  71,911
  76,635
Interest expense (income), $m
  83
  203
  295
  413
  557
  732
  939
  1,180
  1,457
  1,770
  2,120
  2,507
  2,930
  3,388
  3,882
  4,410
  4,972
  5,566
  6,192
  6,849
  7,538
  8,258
  9,009
  9,791
  10,605
  11,451
  12,331
  13,245
  14,195
  15,182
  16,209
Earnings before tax, $m
  395
  650
  962
  1,335
  1,775
  2,284
  2,864
  3,516
  4,241
  5,038
  6,302
  7,241
  8,247
  9,320
  10,457
  11,659
  12,922
  14,247
  15,633
  17,080
  18,588
  20,157
  21,790
  23,487
  25,251
  27,083
  28,988
  30,967
  33,025
  35,165
Tax expense, $m
  107
  175
  260
  360
  479
  617
  773
  949
  1,145
  1,360
  1,702
  1,955
  2,227
  2,516
  2,823
  3,148
  3,489
  3,847
  4,221
  4,612
  5,019
  5,442
  5,883
  6,341
  6,818
  7,313
  7,827
  8,361
  8,917
  9,495
Net income, $m
  288
  474
  702
  975
  1,296
  1,667
  2,091
  2,567
  3,096
  3,678
  4,601
  5,286
  6,020
  6,803
  7,634
  8,511
  9,433
  10,400
  11,412
  12,468
  13,569
  14,715
  15,907
  17,145
  18,433
  19,771
  21,161
  22,606
  24,108
  25,671

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,363
  12,638
  16,679
  21,561
  27,350
  34,096
  41,834
  50,589
  60,370
  71,177
  83,001
  95,824
  109,627
  124,388
  140,083
  156,692
  174,195
  192,579
  211,833
  231,954
  252,942
  274,806
  297,558
  321,217
  345,811
  371,368
  397,927
  425,528
  454,221
  484,056
Adjusted assets (=assets-cash), $m
  9,363
  12,638
  16,679
  21,561
  27,350
  34,096
  41,834
  50,589
  60,370
  71,177
  83,001
  95,824
  109,627
  124,388
  140,083
  156,692
  174,195
  192,579
  211,833
  231,954
  252,942
  274,806
  297,558
  321,217
  345,811
  371,368
  397,927
  425,528
  454,221
  484,056
Revenue / Adjusted assets
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
Average production assets, $m
  3,909
  5,276
  6,963
  9,001
  11,418
  14,234
  17,465
  21,120
  25,203
  29,715
  34,651
  40,005
  45,767
  51,930
  58,482
  65,416
  72,723
  80,398
  88,436
  96,836
  105,598
  114,726
  124,224
  134,102
  144,369
  155,039
  166,126
  177,650
  189,628
  202,084
Working capital, $m
  628
  847
  1,118
  1,445
  1,833
  2,285
  2,804
  3,391
  4,047
  4,771
  5,564
  6,423
  7,349
  8,338
  9,390
  10,503
  11,677
  12,909
  14,200
  15,548
  16,955
  18,421
  19,946
  21,532
  23,180
  24,894
  26,674
  28,524
  30,447
  32,447
Total debt, $m
  4,476
  6,251
  8,441
  11,087
  14,225
  17,881
  22,075
  26,820
  32,122
  37,979
  44,387
  51,337
  58,819
  66,819
  75,326
  84,328
  93,815
  103,779
  114,214
  125,120
  136,495
  148,345
  160,677
  173,501
  186,830
  200,682
  215,077
  230,037
  245,588
  261,759
Total liabilities, $m
  5,075
  6,850
  9,040
  11,686
  14,824
  18,480
  22,674
  27,419
  32,721
  38,578
  44,986
  51,937
  59,418
  67,418
  75,925
  84,927
  94,414
  104,378
  114,814
  125,719
  137,095
  148,945
  161,276
  174,100
  187,429
  201,281
  215,676
  230,636
  246,188
  262,358
Total equity, $m
  4,288
  5,788
  7,639
  9,875
  12,526
  15,616
  19,160
  23,170
  27,650
  32,599
  38,014
  43,887
  50,209
  56,970
  64,158
  71,765
  79,781
  88,201
  97,020
  106,235
  115,848
  125,861
  136,281
  147,118
  158,381
  170,087
  182,250
  194,892
  208,033
  221,698
Total liabilities and equity, $m
  9,363
  12,638
  16,679
  21,561
  27,350
  34,096
  41,834
  50,589
  60,371
  71,177
  83,000
  95,824
  109,627
  124,388
  140,083
  156,692
  174,195
  192,579
  211,834
  231,954
  252,943
  274,806
  297,557
  321,218
  345,810
  371,368
  397,926
  425,528
  454,221
  484,056
Debt-to-equity ratio
  1.040
  1.080
  1.100
  1.120
  1.140
  1.150
  1.150
  1.160
  1.160
  1.170
  1.170
  1.170
  1.170
  1.170
  1.170
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
Adjusted equity ratio
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  288
  474
  702
  975
  1,296
  1,667
  2,091
  2,567
  3,096
  3,678
  4,601
  5,286
  6,020
  6,803
  7,634
  8,511
  9,433
  10,400
  11,412
  12,468
  13,569
  14,715
  15,907
  17,145
  18,433
  19,771
  21,161
  22,606
  24,108
  25,671
Depreciation, amort., depletion, $m
  885
  1,056
  1,266
  1,521
  1,823
  2,175
  2,579
  3,036
  3,547
  4,110
  4,331
  5,001
  5,721
  6,491
  7,310
  8,177
  9,090
  10,050
  11,055
  12,105
  13,200
  14,341
  15,528
  16,763
  18,046
  19,380
  20,766
  22,206
  23,703
  25,260
Funds from operations, $m
  1,173
  1,530
  1,968
  2,496
  3,119
  3,843
  4,670
  5,603
  6,642
  7,788
  8,932
  10,286
  11,741
  13,294
  14,944
  16,688
  18,524
  20,450
  22,467
  24,573
  26,769
  29,055
  31,435
  33,908
  36,479
  39,151
  41,927
  44,812
  47,812
  50,931
Change in working capital, $m
  174
  219
  271
  327
  388
  452
  519
  587
  656
  724
  793
  860
  925
  989
  1,052
  1,113
  1,173
  1,232
  1,291
  1,349
  1,407
  1,466
  1,525
  1,586
  1,649
  1,713
  1,780
  1,850
  1,923
  2,000
Cash from operations, $m
  999
  1,310
  1,698
  2,169
  2,731
  3,390
  4,151
  5,016
  5,987
  7,064
  8,140
  9,427
  10,816
  12,305
  13,892
  15,574
  17,350
  19,218
  21,176
  23,224
  25,362
  27,590
  29,909
  32,322
  34,831
  37,438
  40,147
  42,962
  45,889
  48,931
Maintenance CAPEX, $m
  -353
  -489
  -660
  -870
  -1,125
  -1,427
  -1,779
  -2,183
  -2,640
  -3,150
  -3,714
  -4,331
  -5,001
  -5,721
  -6,491
  -7,310
  -8,177
  -9,090
  -10,050
  -11,055
  -12,105
  -13,200
  -14,341
  -15,528
  -16,763
  -18,046
  -19,380
  -20,766
  -22,206
  -23,703
New CAPEX, $m
  -1,081
  -1,367
  -1,687
  -2,038
  -2,417
  -2,816
  -3,231
  -3,655
  -4,083
  -4,512
  -4,936
  -5,354
  -5,763
  -6,162
  -6,552
  -6,934
  -7,307
  -7,675
  -8,038
  -8,400
  -8,762
  -9,128
  -9,498
  -9,878
  -10,267
  -10,670
  -11,088
  -11,523
  -11,978
  -12,456
Cash from investing activities, $m
  -1,434
  -1,856
  -2,347
  -2,908
  -3,542
  -4,243
  -5,010
  -5,838
  -6,723
  -7,662
  -8,650
  -9,685
  -10,764
  -11,883
  -13,043
  -14,244
  -15,484
  -16,765
  -18,088
  -19,455
  -20,867
  -22,328
  -23,839
  -25,406
  -27,030
  -28,716
  -30,468
  -32,289
  -34,184
  -36,159
Free cash flow, $m
  -436
  -545
  -649
  -740
  -811
  -853
  -859
  -822
  -737
  -598
  -511
  -258
  53
  422
  848
  1,330
  1,866
  2,453
  3,088
  3,769
  4,495
  5,263
  6,070
  6,917
  7,801
  8,722
  9,679
  10,673
  11,704
  12,772
Issuance/(repayment) of debt, $m
  1,408
  1,775
  2,190
  2,646
  3,138
  3,656
  4,194
  4,745
  5,301
  5,857
  6,408
  6,950
  7,481
  8,000
  8,507
  9,002
  9,487
  9,964
  10,436
  10,905
  11,376
  11,850
  12,332
  12,824
  13,329
  13,852
  14,395
  14,960
  15,551
  16,171
Issuance/(repurchase) of shares, $m
  899
  1,025
  1,149
  1,262
  1,356
  1,422
  1,454
  1,443
  1,384
  1,272
  814
  588
  302
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,307
  2,800
  3,339
  3,908
  4,494
  5,078
  5,648
  6,188
  6,685
  7,129
  7,222
  7,538
  7,783
  8,000
  8,507
  9,002
  9,487
  9,964
  10,436
  10,905
  11,376
  11,850
  12,332
  12,824
  13,329
  13,852
  14,395
  14,960
  15,551
  16,171
Total cash flow (excl. dividends), $m
  1,872
  2,255
  2,690
  3,168
  3,682
  4,225
  4,789
  5,366
  5,949
  6,531
  6,712
  7,280
  7,836
  8,422
  9,355
  10,332
  11,353
  12,417
  13,524
  14,675
  15,871
  17,113
  18,402
  19,740
  21,130
  22,574
  24,074
  25,633
  27,255
  28,943
Retained Cash Flow (-), $m
  -1,188
  -1,500
  -1,851
  -2,236
  -2,651
  -3,089
  -3,544
  -4,010
  -4,480
  -4,950
  -5,415
  -5,873
  -6,322
  -6,760
  -7,188
  -7,607
  -8,017
  -8,420
  -8,818
  -9,215
  -9,613
  -10,013
  -10,420
  -10,836
  -11,264
  -11,705
  -12,164
  -12,642
  -13,141
  -13,665
Prev. year cash balance distribution, $m
  179
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  863
  755
  839
  932
  1,031
  1,136
  1,245
  1,356
  1,469
  1,581
  1,297
  1,406
  1,514
  1,662
  2,167
  2,726
  3,336
  3,997
  4,705
  5,460
  6,258
  7,099
  7,981
  8,904
  9,867
  10,869
  11,910
  12,992
  14,114
  15,278
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  827
  691
  730
  767
  799
  824
  841
  848
  844
  829
  616
  600
  576
  558
  636
  693
  726
  736
  724
  694
  647
  589
  523
  454
  384
  317
  256
  201
  154
  115
Current shareholders' claim on cash, %
  95.8
  92.5
  89.8
  87.7
  85.9
  84.5
  83.3
  82.4
  81.6
  81.1
  80.8
  80.6
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5
  80.5

Microchip Technology Incorporated is engaged in developing, manufacturing and selling specialized semiconductor products used by its customers for a range of embedded control applications. The Company operates through two segments: semiconductor products and technology licensing. In the semiconductor products segment, the Company designs, develops, manufactures and markets microcontrollers, development tools and analog, interface, mixed signal and timing products. Its functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance. Its product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a spectrum of linear, mixed-signal, power management, thermal management, radio frequency (RF), timing, safety, security, wired connectivity and wireless connectivity devices, as well as serial electrically erasable programmable read-only memories (EEPROMs) and serial flash memories.

FINANCIAL RATIOS  of  Microchip Technology Incorporated (MCHP)

Valuation Ratios
P/E Ratio 128.2
Price to Sales 6.2
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 20
Price to Free Cash Flow 21.5
Growth Rates
Sales Growth Rate 56.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.5%
Cap. Spend. - 3 Yr. Gr. Rate -7.9%
Financial Strength
Quick Ratio 26
Current Ratio 0.1
LT Debt to Equity 88.7%
Total Debt to Equity 90.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 13.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 51.6%
Gross Margin - 3 Yr. Avg. 54.8%
EBITDA Margin 18.8%
EBITDA Margin - 3 Yr. Avg. 26.1%
Operating Margin 6.8%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 10.6%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 12.3%
Effective Tax Rate -90%
Eff/ Tax Rate - 3 Yr. Avg. -36.9%
Payout Ratio 190.9%

MCHP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MCHP stock intrinsic value calculation we used $3981 million for the last fiscal year's total revenue generated by Microchip Technology Incorporated. The default revenue input number comes from 0001 income statement of Microchip Technology Incorporated. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MCHP stock valuation model: a) initial revenue growth rate of 38.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for MCHP is calculated based on our internal credit rating of Microchip Technology Incorporated, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Microchip Technology Incorporated.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MCHP stock the variable cost ratio is equal to 91.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MCHP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.6% for Microchip Technology Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Microchip Technology Incorporated. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MCHP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MCHP are equal to 71%.

Life of production assets of 8 years is the average useful life of capital assets used in Microchip Technology Incorporated operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MCHP is equal to 11.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3279.8 million for Microchip Technology Incorporated - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 236.934 million for Microchip Technology Incorporated is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Microchip Technology Incorporated at the current share price and the inputted number of shares is $21.9 billion.

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