Allegro Microsystems Inc (ALGM)

Cash ratio

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021
Cash and cash equivalents	US$ in thousands	212,143	351,576	282,383	197,214
Short-term investments	US$ in thousands	—	—	12,346	26,664
Total current liabilities	US$ in thousands	117,908	165,325	104,223	116,674
Cash ratio		1.80	2.13	2.83	1.92

March 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($212,143K + $—K) ÷ $117,908K
= 1.80

The cash ratio of Allegro Microsystems Inc has exhibited a fluctuating trend over the past four years. In the most recent fiscal year ending on March 31, 2024, the cash ratio was 1.80, indicating a decrease from the previous year's ratio of 2.13. However, when compared to two years ago, the cash ratio has experienced a more significant decline, as it stood at 2.83 on March 31, 2022. In the fiscal year ending March 31, 2021, the cash ratio was 1.92.

The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio suggests that the company has a stronger ability to settle its short-term obligations using its readily available cash resources. Conversely, a lower cash ratio may indicate a potential liquidity risk.

Allegro Microsystems Inc should further analyze the reasons behind the decline in its cash ratio to assess its liquidity position accurately. Management may need to evaluate its cash management practices, operating efficiency, and potential impacts on working capital to address any liquidity concerns.