Alpha and Omega Semiconductor Ltd (AOSL)

The liquidity position of Alpha and Omega Semiconductor Ltd has exhibited notable fluctuations across the reporting periods, reflecting varying degrees of short-term financial health.

Starting with the current ratio, which measures the company's ability to cover its current liabilities with current assets, recent figures indicate a generally positive trend. As of September 30, 2020, the ratio stood at 1.67, gradually increasing over time to reach a peak of 2.72 on December 31, 2024. The ratio remained above 2.50 for the majority of the recent periods, indicating that the company maintained a comfortable liquidity margin, with sufficient current assets to meet short-term obligations. The slight decline to 2.52 by December 31, 2024, and further to 2.47 in March 2024, still signifies a robust liquidity position, although the recent upward trend toward September 2024 suggests improved short-term solvency.

The quick ratio, which refines the current ratio by excluding inventory from current assets, presents a more conservative view. It has shown a steady upward trajectory from 0.91 on September 30, 2020, to a high of 3.76 on December 31, 2024. This substantial increase indicates a strengthening of liquid assets—such as receivables and cash—relative to current liabilities. Notably, there was a significant jump in the quick ratio at December 31, 2024, which correlates with a corresponding rise in cash and cash equivalents, emphasizing enhanced immediate liquidity.

The cash ratio, the most conservative liquidity measure, further underscores the company's solid liquidity stance. It increased from 0.78 on September 30, 2020, to a peak of 3.56 on December 31, 2024. This indicates that the company's cash and cash equivalents alone stood well above its current liabilities in this period, signifying a significant liquidity buffer that can cover short-term obligations without reliance on other current assets.

Overall, data suggest that Alpha and Omega Semiconductor Ltd has maintained a consistent and strengthening liquidity position over the analyzed period. The rising trend across all three ratios—current, quick, and cash—indicates an improving short-term solvency profile. The notably high cash ratio at the end of 2024 signals strong liquidity reserves, further supporting the company's capacity to meet its immediate liabilities comfortably.

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Additional liquidity measure

The analysis of Alpha and Omega Semiconductor Ltd's cash conversion cycle (CCC) over the period from September 30, 2020, to June 30, 2025, reveals a consistent upward trend. Initially, the CCC was approximately 67.36 days as of September 30, 2020. Throughout the subsequent quarters, the cycle exhibited fluctuations but generally moved higher, reaching a peak of 132.91 days by December 31, 2023.

From this peak, there was a slight reduction to 125.75 days as of March 31, 2024, followed by minor fluctuations, maintaining a level around 113 to 123 days through to June 30, 2025. Overall, the data indicates that the company's CCC has lengthened significantly over the observed period, increasing by approximately 65.3 days, which suggests an extended period to convert investments in inventory and receivables into cash.

This rising trend may reflect issues such as longer inventory holding periods, extended receivables collection cycles, or delays in cash realization from sales. An increasing CCC can impact liquidity, following the cash flow and working capital management efficiency. It may necessitate strategic adjustments to reduce inventory days or improve receivables collection processes. The company’s operational cycle appears to have lengthened, which could be influenced by changes in sales or inventory policies, industry-specific factors, or macroeconomic conditions.