Allegro Microsystems Inc (ALGM)

Allegro Microsystems Inc's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio has shown a stable and generally increasing trend over the years from 3.69 in 2021 to 4.30 in 2025. This implies that Allegro has a strong ability to cover its current liabilities with its current assets.

Similarly, the quick ratio, which accounts for assets that can be quickly converted to cash, has also demonstrated an upward trend, reaching 1.83 in 2025 from 2.73 in 2021. Although there was a slight dip in 2023, the ratio has generally improved, suggesting that Allegro has a comfortable level of liquid assets to cover its short-term liabilities.

On the other hand, the cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has fluctuated over the years. While the ratio increased from 1.92 in 2021 to 2.83 in 2022, it then decreased to 1.08 in 2025. This decrease may indicate a concentration of cash in other asset forms rather than easily accessible cash reserves.

Overall, Allegro Microsystems Inc has maintained strong liquidity positions over the years, as evidenced by the current and quick ratios. However, the fluctuation in the cash ratio suggests that the company may need to assess its cash management strategies to ensure that it maintains adequate cash reserves to meet any unforeseen obligations.

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Additional liquidity measure

The cash conversion cycle is a key metric that reflects how efficiently a company manages its working capital. It encompasses the average number of days it takes for a company to convert its investments in inventory and other resources into cash received from customers.

Based on the data provided for Allegro Microsystems Inc:

- As of March 31, 2021, the cash conversion cycle was 119.46 days.
- By March 31, 2022, the cash conversion cycle improved slightly to 114.25 days, indicating a more efficient conversion of resources into cash.
- However, by March 31, 2023, the cash conversion cycle increased to 130.05 days, suggesting a potential delay in the conversion process.
- This trend continued, with the cycle further deteriorating to 139.40 days by March 31, 2024, indicating a longer period between investing in resources and realizing cash inflows.
- The cash conversion cycle reached its peak by March 31, 2025, at 173.93 days, signifying a significant lag in converting investments into cash receipts.

Overall, the increasing trend in Allegro Microsystems Inc's cash conversion cycle from 2021 to 2025 suggests potential issues with working capital management or operational inefficiencies that may need to be addressed to improve the company's liquidity and financial performance.