Allegro Microsystems Inc (ALGM)

Cash conversion cycle

		Mar 31, 2025	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 31, 2022	Dec 23, 2022	Sep 30, 2022	Sep 23, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	166.37	172.85	149.13	143.76	124.77	127.52	137.67	136.29	122.24	94.95	96.38	84.91	89.86	88.54	87.87	82.10	80.00	89.31	106.00	108.03
Days of sales outstanding (DSO)	days	42.59	39.58	33.06	26.13	43.54	40.02	42.03	43.81	47.41	50.38	49.68	50.90	51.62	57.14	57.33	52.74	50.16	56.65	58.56	54.91
Number of days of payables	days	35.04	35.52	42.42	32.89	28.90	28.99	49.79	51.16	45.45	39.66	40.25	39.11	37.08	34.34	30.43	35.59	29.89	37.63	42.87	23.28
Cash conversion cycle	days	173.93	176.92	139.78	137.00	139.41	138.55	129.91	128.93	124.20	105.67	105.80	96.71	104.39	111.34	114.77	99.25	100.27	108.33	121.68	139.66

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 of Allegro Microsystems Inc has shown fluctuations over the analyzed period. It measures the time it takes for a company to convert its investments in raw materials into cash from sales to customers.

From December 2020 to December 2022, the company managed to improve its cash conversion cycle from 139.66 days to 105.67 days, indicating more efficient management of inventory, accounts receivable, and accounts payable.

However, from March 2023 to March 2025, the cash conversion cycle started to increase again, suggesting potential challenges in managing working capital effectively.

Overall, consistent monitoring and optimization of the cash conversion cycle will be crucial for Allegro Microsystems Inc to maintain efficient operations and maximize cash flow.