Allegro Microsystems Inc (ALGM)

Cash conversion cycle

		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
Days of inventory on hand (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
Days of sales outstanding (DSO)	days	41.47	34.65	24.78	41.45	38.98	40.65	43.03	53.20	51.65	51.53	55.51	54.47	52.13	50.26	56.71
Number of days of payables	days	24.21	28.84	19.91	19.44	21.00	38.16	42.29	36.11	32.74	26.58	22.49	21.09	24.52	19.60	25.94
Cash conversion cycle	days	135.09	107.20	103.94	109.74	110.35	108.00	113.40	114.21	97.30	89.36	91.01	94.28	84.17	83.12	92.33

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 117.84 + 41.47 – 24.21
= 135.09

The cash conversion cycle of Allegro Microsystems Inc has displayed fluctuations over the reported periods, ranging from 83.12 days to 135.09 days. This metric represents the time it takes for the company to convert its investments in inventory into cash from sales.

During the last two years, the cash conversion cycle generally increased, indicating that Allegro Microsystems Inc may be experiencing challenges in efficiently managing its working capital. A longer cash conversion cycle implies that the company takes more time to sell its inventory and collect cash from customers, which can tie up valuable resources and potentially harm cash flow.

It is essential for the company to closely monitor its inventory management, accounts payable, and accounts receivable processes to improve its cash conversion cycle. By implementing strategies to streamline operations, negotiate better payment terms with suppliers, and enhance collections from customers, Allegro Microsystems Inc may be able to shorten its cash conversion cycle, improve liquidity, and enhance overall financial performance.