Allegro Microsystems Inc (ALGM)

Cash conversion cycle

		Mar 31, 2025	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021
Days of inventory on hand (DOH)	days	166.37	124.76	129.16	87.06	102.26
Days of sales outstanding (DSO)	days	42.59	43.54	48.91	57.33	58.56
Number of days of payables	days	35.04	28.89	48.02	30.15	41.36
Cash conversion cycle	days	173.93	139.40	130.05	114.25	119.46

March 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 166.37 + 42.59 – 35.04
= 173.93

The cash conversion cycle is a critical metric for evaluating the efficiency of Allegro Microsystems Inc's working capital management. Over the past five years, Allegro Microsystems Inc's cash conversion cycle has exhibited some fluctuations.

As of March 31, 2021, the company's cash conversion cycle stood at 119.46 days, indicating that it took approximately 119 days to convert its investments in inventory and other resources into cash flow from sales. By March 31, 2022, the cash conversion cycle improved slightly to 114.25 days, suggesting a more efficient conversion of resources into cash.

However, in the subsequent years, there was an increase in the cash conversion cycle for Allegro Microsystems Inc. By March 31, 2023, the cash conversion cycle extended to 130.05 days, and by March 31, 2024, it further increased to 139.40 days. This upward trend indicates a potential slowdown in the company's ability to convert resources into cash efficiently.

The most significant increase was observed by March 31, 2025, when Allegro Microsystems Inc's cash conversion cycle reached 173.93 days. This indicates a significant delay in converting investments in resources like inventory into cash flow from sales, which could potentially impact the company's liquidity and working capital management.

Overall, Allegro Microsystems Inc needs to focus on optimizing its cash conversion cycle to ensure smoother operations and better liquidity management in the future.