Allegro Microsystems Inc (ALGM)

Days of inventory on hand (DOH)

		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 23, 2022	Sep 23, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021
Inventory turnover		3.10	3.60	3.68	4.16	3.95	3.46	3.24	3.76	4.66	5.67	6.29	5.99	6.45	6.96	5.93
DOH	days	117.84	101.39	99.06	87.74	92.37	105.51	112.65	97.12	78.39	64.41	58.00	60.90	56.56	52.46	61.56

December 31, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 3.10
= 117.84

The days of inventory on hand (DOH) is a crucial financial ratio that indicates the average number of days it takes for a company to sell its inventory. In the case of Allegro Microsystems Inc, the DOH has fluctuated over the period from June 30, 2021, to December 31, 2024.

Initially, on June 30, 2021, Allegro Microsystems had inventory that could support operations for approximately 61.56 days. This decreased to 52.46 days by September 30, 2021, indicating more efficient inventory management. However, the DOH increased to 56.56 days by December 31, 2021.

Subsequently, there was a gradual increase in DOH to 112.65 days by June 30, 2023, suggesting potential issues in inventory management impacting the liquidity and efficiency of the company. The DOH decreased slightly to 87.74 days by March 31, 2024, before rising again to 117.84 days by December 31, 2024.

The significant increase in DOH towards the end of the period could indicate excess inventory or difficulties in selling products efficiently. This prolonged inventory holding period may tie up financial resources, increase carrying costs, and potentially lead to obsolete inventory concerns.

Allegro Microsystems should assess and optimize its inventory management practices to strike a balance between meeting customer demand and controlling inventory levels to enhance operational efficiency and financial performance in the future.