Albemarle Corp (ALB)

Inventory turnover

		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	Jun 30, 2019	Mar 31, 2019
Cost of revenue (ttm)	US$ in thousands	8,431,290	6,990,730	5,783,060	4,870,529	4,245,517	3,283,467	2,816,770	2,443,080	2,329,986	2,286,103	2,197,622	2,202,833	2,134,056	2,174,382	2,251,450	2,279,898	2,331,649	2,278,911	2,206,242	2,189,622
Inventory	US$ in thousands	2,161,290	3,404,210	3,658,620	3,180,820	2,076,030	1,614,300	1,216,210	1,013,790	798,620	745,598	732,563	685,779	750,237	828,080	851,256	853,500	768,984	802,434	814,022	756,193
Inventory turnover		3.90	2.05	1.58	1.53	2.05	2.03	2.32	2.41	2.92	3.07	3.00	3.21	2.84	2.63	2.64	2.67	3.03	2.84	2.71	2.90

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $8,431,290K ÷ $2,161,290K
= 3.90

The inventory turnover ratio measures how efficiently a company manages its inventory by evaluating how many times during a specific period the company sells and replaces its inventory. A higher inventory turnover ratio indicates that the company is selling its inventory quickly, while a lower ratio may suggest inefficiency in inventory management.

Looking at the data for Albemarle Corp.'s inventory turnover over the past eight quarters, we observe fluctuations in the ratio. In Q4 2023, the inventory turnover was 3.90, indicating that Albemarle Corp. sold and replaced its inventory approximately 3.90 times during that quarter. This represents a significant improvement compared to the previous quarters.

In Q3 2023, the inventory turnover ratio dropped to 2.05, showing a decline in the efficiency of inventory management compared to Q4 2023. The ratio further decreased to 1.58 in Q2 2023 and 1.53 in Q1 2023, indicating potential inventory management challenges during those periods.

Comparing the recent data to earlier quarters, we can see that in Q4 2022, the inventory turnover ratio was 2.05, similar to Q3 2023, suggesting consistent performance in inventory management. However, the ratio varied in the preceding quarters of 2022, with values ranging from 2.03 to 2.41.

Overall, the trend in Albemarle Corp.'s inventory turnover indicates a mix of efficiency and challenges in managing inventory levels. The company should aim to maintain a balance to avoid overstocking or understocking, which can impact its profitability and cash flow. Management may need to closely monitor inventory levels and sales to optimize the turnover ratio for improved operational performance.