Alpha and Omega Semiconductor Ltd (AOSL)

Cash conversion cycle

		Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Days of inventory on hand (DOH)	days	147.21	149.87	148.97	141.55	136.00	129.79	111.84	114.92	113.33	105.84	98.02	128.07	124.50	123.44	132.69	132.15	136.58	131.75	121.94	125.81
Days of sales outstanding (DSO)	days	8.69	7.79	18.83	20.01	12.51	10.68	25.23	25.87	31.19	26.39	28.80	21.93	21.15	20.49	16.87	19.26	10.47	14.03	27.14	31.66
Number of days of payables	days	—	—	—	—	—	39.48	44.92	55.81	62.66	51.44	47.21	64.01	65.11	69.63	77.11	84.07	86.85	90.98	93.06	98.59
Cash conversion cycle	days	155.90	157.67	167.80	161.56	148.51	100.99	92.15	84.99	81.87	80.80	79.61	85.99	80.53	74.29	72.45	67.34	60.21	54.80	56.02	58.88

June 30, 2024 calculation

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

The cash conversion cycle (CCC) represents the time it takes for a company to convert its investment in inventory into cash flows from sales. A shorter CCC is desirable as it indicates efficient management of working capital.

Analyzing the trend in Alpha and Omega Semiconductor Ltd's CCC from December 2019 to June 2024, we observe fluctuations in the cycle duration. The company's CCC reached its peak at 167.80 days in December 2023 and then decreased gradually to 155.90 days by June 2024.

Throughout this period, the company experienced variations in its inventory turnover, accounts receivable collection period, and accounts payable payment period. An increasing CCC may suggest inefficiencies in managing inventory, slow collection of receivables, or delayed payments to suppliers.

It is worth noting that there was a significant increase in the CCC from June 2022 to December 2023, followed by a gradual decline in the following periods. This fluctuation may indicate changes in the company's operating efficiency and effectiveness in managing its working capital during these periods.

Overall, monitoring and managing the cash conversion cycle can provide insights into the company's liquidity, operational efficiency, and working capital management practices. Further analysis and comparison with industry benchmarks can help identify areas for improvement and optimization in Alpha and Omega Semiconductor Ltd's cash flow conversion process.