Alpha and Omega Semiconductor Ltd (AOSL)

Short-term

Turnover ratios

The activity ratios of Alpha and Omega Semiconductor Ltd provide insights into the company's operational efficiency over the specified periods.

Inventory Turnover:
The company's inventory turnover exhibits a general upward trend from 2.67 times on June 30, 2020, to a peak of approximately 3.72 times at the end of December 2021. This indicates a period of improved inventory management, with the company turning over its inventory more frequently in that period. However, post-December 2021, the ratio declines to around 2.43 by March 2024 before rising slightly again to 2.76 by March 2025. The observed fluctuations suggest periods of both accumulation and better clearance of inventory, with recent figures indicating a somewhat stable but lower turnover rate compared to the peak period.

Receivables Turnover:
Receivables turnover fluctuates significantly over the period. It experiences a sharp decline from 35.03 times in June 2020 to lows around 11.84 in June 2022, reflecting potentially longer collection periods or changes in credit policy. Notably, there are periods of substantial recovery, such as March 2023, where the ratio reaches 37.24 times, implying more efficient receivables management or shorter collection cycles. The figures then oscillate but generally remain in the range of 19 to 45 times in the later periods. High receivables turnover ratios in recent periods suggest improved collection efficiency, whereas the earlier lower ratios could indicate more lenient credit terms or slower collections.

Payables Turnover:
Payables turnover exhibits an overall increasing trend, rising from 4.20 times on June 30, 2020, to approximately 12.37 times by December 2024. This suggests an evolving trend toward shorter payment cycles to suppliers, potentially reflecting more aggressive credit management or favorable credit terms. Fluctuations are observed, but the steady upward trajectory indicates the company is paying its suppliers more frequently over time.

Working Capital Turnover:
The working capital turnover ratios show moderate variation within a narrow band, fluctuating between approximately 2.39 and 3.77 times. There is a brief dip to around 2.52 in December 2021, followed by a gradual recovery. Recently, figures around 2.57 to 2.80 indicate consistent utilization of working capital in generating sales, reflecting stable operational efficiency with limited dramatic shifts.

Summary:
Overall, Alpha and Omega Semiconductor Ltd has demonstrated an improving trend in receivables and payables turnover ratios, implying enhanced liquidity management and credit policies. Inventory management shows variability, with periods of both higher and lower turnover, indicating fluctuating inventory control. The consistency in working capital turnover ratio underscores steady operating efficiency. These patterns collectively suggest a company adapting its operational practices, possibly responding to market conditions or strategic initiatives aimed at optimizing working capital utilization.

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Average number of days

The activity ratios of Alpha and Omega Semiconductor Ltd, as reflected through inventory, receivables, and payables metrics over the specified periods, indicate notable trends and operational characteristics.

Days of Inventory on Hand (DOH):
The company’s inventory holding period exhibits a general upward trend from approximately 136.58 days in June 2020 to 149.96 days in March 2024. There is notable fluctuation within this period; initially, the DOH decreased slightly, reaching a low of 98.02 days at the end of 2021, which suggests more efficient inventory management during that time. Post-2021, the DOH increased substantially, reaching nearly 150 days in early 2024, indicating longer inventory holding periods. This trend may reflect increased inventory levels perhaps due to anticipation of demand, production adjustments, or supply chain considerations.

Days of Sales Outstanding (DSO):
Receivables collection efficiency appears relatively stable with some fluctuations. The DSO started low at around 10-19 days in 2020 and early 2021, peaked at approximately 29 days in December 2021, then markedly decreased to as low as approximately 7.95 days in March 2024. The significant reduction in DSO, especially the sharp drop in early 2024, indicates improvements in collection processes and faster cash conversions from receivables, enhancing liquidity management.

Number of Days of Payables:
The payables period shows variability, with a decreasing trend from approximately 86.85 days in June 2020 to around 35.09 days in December 2023. This reduction signifies that the company is paying its suppliers more promptly over time, possibly due to better cash flow management, supplier negotiations, or changing credit terms. After the lowest point at the end of 2023, the payable days slightly increased again in early 2024, but overall, the trend indicates an inclination toward shorter payable periods.

Overall Analysis:
The company’s inventory turnover period has lengthened over the period, potentially indicating increased inventory holdings which could reflect anticipation of future sales or supply chain buffer strategies. Contrastingly, receivables management has improved significantly, with DSO decreasing to very efficient levels by 2024, contributing positively to cash flow. The shortening of the payables period over time allows for more rapid payments to suppliers, which may be indicative of improved liquidity position or strategic supplier relationship management.

In aggregate, these trends suggest a shift toward more efficient receivables collection and more prompt payables, possibly compensating for increased inventory holdings. This combination could imply a strategic adjustment in working capital management aimed at maintaining liquidity while managing inventory levels amidst changing market or operational conditions.

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Long-term

The long-term activity ratios of Alpha and Omega Semiconductor Ltd. exhibit noteworthy trends over the analyzed period. The Fixed Asset Turnover ratio demonstrates a significant upward trajectory from June 2020 through December 2021, rising from 1.04 to a peak of 3.32. This sharp increase indicates that the company became substantially more efficient at utilizing its fixed assets (such as property, plant, and equipment) to generate sales during this timeframe. The peak in late 2021 suggests a period of intensified asset efficiency, possibly due to strategic asset optimization or improved operational performance.

Following this peak, the Fixed Asset Turnover ratio shows a declining trend, progressively decreasing from 3.10 in March 2022 to approximately 1.93 by June 2023. This decline suggests a reduction in the efficiency with which fixed assets are being employed to generate sales, potentially attributable to increased capital expenditures, asset base expansion, or shifts in operational focus.

Conversely, the Total Asset Turnover ratio displays a more modest fluctuation within a narrower band, ranging from approximately 0.54 to 0.72 over the same period. It exhibits a gradual decline from about 0.69 in March 2021 to 0.55 in September 2023, before stabilizing around 0.61 in March 2025. This steadiness indicates that overall asset utilization efficiency has remained relatively stable, with only minor variations despite changes in fixed asset utilization.

In summary, during the period under review, Alpha and Omega Semiconductor Ltd. experienced a pronounced improvement in fixed asset efficiency until late 2021, followed by a decline suggesting either increased capital investments or operational adjustments. Meanwhile, the total asset efficiency has maintained relative stability, reflecting a consistent overall utilization of the company's total assets to generate revenue over time.