Archer-Daniels-Midland Company (ADM)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 86,422,000 | 93,986,000 | 79,262,000 | 59,902,000 | 60,509,000 |
| Inventory | US$ in thousands | 11,957,000 | 14,771,000 | 14,481,000 | 11,713,000 | 9,170,000 |
| Inventory turnover | 7.23 | 6.36 | 5.47 | 5.11 | 6.60 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $86,422,000K ÷ $11,957,000K
= 7.23
Archer-Daniels-Midland Company has shown a consistent improvement in its inventory turnover ratio over the past five years. The trend indicates that the company has been more effective in managing its inventory levels and turning over its stock into sales. The inventory turnover ratio has increased from 6.60 in 2019 to 7.23 in 2023, reflecting a positive trajectory.
A higher inventory turnover ratio signifies that the company is efficiently managing its inventory by selling products more quickly, which can lead to reduced holding costs and improved cash flow. It indicates that Archer-Daniels-Midland Company is able to convert its inventory into sales at a faster rate, which is generally a positive sign of operational efficiency.
Overall, the increasing trend in inventory turnover ratio for Archer-Daniels-Midland Company suggests effective inventory management practices and a more streamlined supply chain, which can ultimately contribute to improved financial performance and profitability.
Peer comparison
Dec 31, 2023