Alpha and Omega Semiconductor Ltd (AOSL)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	147.21	136.00	113.33	124.50	136.58
Days of sales outstanding (DSO)	days	8.69	12.51	31.19	21.15	10.47
Number of days of payables	days	—	—	62.66	65.11	86.85
Cash conversion cycle	days	155.90	148.51	81.87	80.53	60.21

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 147.21 + 8.69 – —
= 155.90

The cash conversion cycle of Alpha and Omega Semiconductor Ltd has exhibited fluctuations over the past five years. From June 2020 to June 2022, there was a significant increase in the cash conversion cycle, indicating a slowdown in the company's cash flow efficiency. However, in the subsequent years, there was a slight decrease in the cash conversion cycle, suggesting an improvement in managing its cash conversion process.

The company's cash conversion cycle was at its lowest point in June 2020 at 60.21 days and peaked in June 2024 at 155.90 days. A longer cash conversion cycle typically indicates that the company takes longer to convert its investments in inventory into cash from sales, which may result in liquidity challenges. Conversely, a shorter cash conversion cycle implies improved liquidity and more efficient cash flow management.

Overall, Alpha and Omega Semiconductor Ltd should continue monitoring and managing its cash conversion cycle effectively to ensure optimal cash flow efficiency and financial performance.