Allegro Microsystems Inc (ALGM)

Cash conversion cycle

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021
Days of inventory on hand (DOH)	days	87.88	100.72	60.90	67.06
Days of sales outstanding (DSO)	days	41.45	53.23	54.47	58.83
Number of days of payables	days	19.47	37.45	21.09	27.12
Cash conversion cycle	days	109.85	116.50	94.28	98.77

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 87.88 + 41.45 – 19.47
= 109.85

The cash conversion cycle of Allegro Microsystems Inc has exhibited fluctuations over the past four fiscal years. In the most recent fiscal year ending March 31, 2024, the cash conversion cycle was 109.85 days, showing a slight improvement from the previous fiscal year. This indicates that the company took, on average, around 110 days to convert its investments in inventory back into cash received from sales.

Comparing the trend over the four years, we observe that the cash conversion cycle was relatively high in the fiscal year ending March 31, 2023, at 116.50 days, indicating that the company was taking longer to convert its investments into cash. However, there was a significant improvement in the fiscal year ending March 31, 2022, with a cycle of 94.28 days, suggesting more efficient management of working capital.

Looking further back to the fiscal year ending March 31, 2021, we see a cash conversion cycle of 98.77 days, indicating a moderate efficiency in converting inventory into sales and receiving cash.

Overall, Allegro Microsystems Inc has experienced variations in its cash conversion cycle over the past four years. The company should continue to focus on effective inventory management, accounts receivable collection, and payables management to optimize its working capital efficiency and improve its cash conversion cycle in the future.