Allegro Microsystems Inc (ALGM)

Short-term

Turnover ratios

Allegro Microsystems Inc's activity ratios provide insights into the efficiency with which the company manages its assets and operations. Let's delve into the analysis of the activity ratios based on the provided data:

1. Inventory Turnover:
- Allegro Microsystems Inc's inventory turnover has shown some fluctuations over the years. It increased from 3.57 in 2021 to 4.19 in 2022, indicating improved efficiency in selling inventory. However, the ratio decreased to 2.83 in 2023, showing a decline in inventory turnover. The ratio slightly improved in 2024 and decreased again in 2025 to 2.19, suggesting that the company may be experiencing challenges in managing its inventory efficiently in recent years.

2. Receivables Turnover:
- The receivables turnover ratio has been consistently increasing over the years for Allegro Microsystems Inc. The ratio rose from 6.23 in 2021 to 8.57 in 2025. This trend indicates that the company is collecting its receivables at a faster pace, which is a positive sign of efficient management of accounts receivable and cash flow.

3. Payables Turnover:
- Allegro Microsystems Inc's payables turnover ratio has been fluctuating over the years. The ratio increased significantly from 8.82 in 2021 to 12.11 in 2022, signaling that the company is taking longer to pay its suppliers. The ratio decreased in 2023 and increased again in 2024 before declining to 10.42 in 2025. This fluctuation might suggest changes in the company's payment terms with its suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio has shown a relatively stable trend with minor fluctuations. The ratio ranged from 1.88 in 2021 to 2.31 in 2024 before decreasing to 1.96 in 2025. This ratio indicates how effectively the company is utilizing its working capital to generate revenue. The fluctuation in this ratio could be due to changes in the company's operating cycle or revenue generation strategies.

In summary, Allegro Microsystems Inc has shown varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the years. The company should continue monitoring and improving these activity ratios to enhance its operational efficiency and financial performance.

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Average number of days

Allegro Microsystems Inc's activity ratios indicate how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- In 2021, Allegro had inventory on hand for an average of 102.26 days, which reduced to 87.06 days in 2022, indicating a more efficient management of inventory levels. However, there was an increase in 2023 and 2024 to 129.16 days and 124.76 days, respectively, which could suggest excess inventory or slower sales.
- By 2025, the days of inventory on hand rose significantly to 166.37 days, implying potential overstocking or challenges in sales demand management.

2. Days of Sales Outstanding (DSO):
- For receivables collection, the company improved its efficiency from 58.56 days in 2021 to 42.59 days in 2025. A decreasing trend in DSO indicates that Allegro is collecting payments from customers more quickly over the years.
- Lower DSO values reflect better credit policies and management of accounts receivable, showcasing a positive trend in the company's cash flow cycle.

3. Number of Days of Payables:
- Allegro managed its payables effectively with a decrease from 41.36 days in 2021 to 35.04 days in 2025. The lower number of days of payables suggests the company is settling its obligations to suppliers more promptly.
- Despite some fluctuations, the general trend shows a decrease in days of payables, which can indicate good relationships with suppliers or negotiation for better payment terms.

Overall, Allegro Microsystems Inc's activity ratios demonstrate improvements in managing inventory, receivables, and payables over the years, contributing to enhanced operational efficiency and liquidity management. However, the significant rise in days of inventory on hand in 2025 might require further analysis to understand the underlying reasons and potential strategies for optimization.

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Long-term

Allegro Microsystems Inc's fixed asset turnover has shown a positive trend, increasing from 3.07 in March 31, 2021, to 3.70 in March 31, 2023. This indicates that the company is generating more sales revenue per dollar invested in fixed assets over time.

However, the data for March 31, 2024, and March 31, 2025 are not available, so we cannot assess the performance for those periods.

On the other hand, the total asset turnover ratio has been fluctuating. It increased from 0.79 in March 31, 2021, to 0.86 in March 31, 2022, but then decreased to 0.82 in March 31, 2023. Subsequently, there was a significant drop to 0.69 in March 31, 2024, and a further decline to 0.51 in March 31, 2025.

Overall, while the fixed asset turnover ratio indicates a positive trend, the total asset turnover ratio shows inconsistency and a declining trend in recent years, suggesting that the company may not be efficiently utilizing its total assets to generate sales revenue.