Alpha and Omega Semiconductor Ltd (AOSL)

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 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
Days of inventory on hand (DOH) days 132.09 132.83 136.94 148.19 149.96 148.97 141.55 136.00 129.79 111.84 114.92 113.33 105.84 98.02 128.07 124.50 123.44 132.69 132.15 136.58
Days of sales outstanding (DSO) days 16.11 16.73 17.24 8.86 7.95 19.02 18.93 11.84 9.80 25.34 25.48 30.83 18.81 28.99 23.27 19.89 21.48 16.87 19.26 10.42
Number of days of payables days 35.82 29.51 30.98 33.90 32.16 35.09 39.41 37.68 39.48 44.92 55.81 62.66 51.44 47.21 64.01 65.11 69.63 77.11 84.07 86.85
Cash conversion cycle days 112.38 120.05 123.20 123.14 125.75 132.91 121.07 110.16 100.11 92.26 84.59 81.50 73.21 79.79 87.33 79.27 75.29 72.45 67.34 60.15

March 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 132.09 + 16.11 – 35.82
= 112.38

The analysis of Alpha and Omega Semiconductor Ltd's cash conversion cycle (CCC) over the specified period reveals a consistent upward trend, indicating increasing reliance on concurrent cash and working capital management challenges.

From June 30, 2020, with a CCC of approximately 60.15 days, the cycle experienced a gradual increase over the subsequent quarters. By September 30, 2020, the CCC rose to approximately 67.34 days, and continued its upward trajectory reaching roughly 72.45 days by December 31, 2020. The trend persisted into 2021, with the cycle extending to about 79.27 days by June 30, 2021, and further to 87.33 days by September 30, 2021. The rise during this period suggests a lengthening in the time it takes for the company to convert its investments in inventory and receivables into cash, possibly indicating slower collections or longer inventory holding periods.

The upward momentum persisted into 2022, with the CCC increasing from approximately 79.79 days at the end of 2021 to about 92.26 days by December 31. The cycle reached approximately 100.11 days by March 2023, reflecting a significant elongation over the previous years. Subsequent quarters continued this trend, with the CCC peaking at around 132.91 days by December 31, 2023.

In 2024, the cash conversion cycle showed signs of stabilization, albeit at elevated levels: around 125.75 days by March 31, 2024, and decreasing slightly to approximately 123.14 days by June 30, 2024. This marginal decline persisted through September 30, 2024, with the cycle at roughly 123.20 days, and further decreased to about 120.05 days by December 31, 2024. The trend continued into early 2025, with the CCC further reducing to approximately 112.38 days by March 31, 2025.

Overall, the data indicates that Alpha and Omega Semiconductor Ltd's cash conversion cycle has experienced a significant increase over the observed period from around 60 days in mid-2020 to over 132 days at the end of 2023, before starting to decline modestly in 2024 and early 2025. This pattern may reflect changes in operational efficiency, inventory management policies, customer payment terms, or strategic shifts affecting receivables and inventory turnover. Such an elongated cycle could impact liquidity and working capital requirements, suggesting the need for careful management to optimize cash flow efficiency moving forward.