Albemarle Corp (ALB)

Inventory turnover

		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	Mar 31, 2020
Cost of revenue (ttm)	US$ in thousands	5,314,990	7,281,710	8,078,640	8,449,380	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
Inventory	US$ in thousands	1,502,530	1,657,690	1,800,110	1,904,830	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
Inventory turnover		3.54	4.39	4.49	4.44	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

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $5,314,990K ÷ $1,502,530K
= 3.54

The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. A higher inventory turnover ratio generally indicates that the company is selling goods quickly and efficiently, while a lower ratio may suggest overstocking or slow sales.

Analyzing Albemarle Corp's inventory turnover data, we observe some fluctuations in the ratio over the reported periods. From March 31, 2020, to June 30, 2021, there was a gradual increase in inventory turnover from 2.67 to 3.00. This upward trend indicates an improvement in the company's ability to sell through its inventory.

However, from September 30, 2021, to March 31, 2024, the inventory turnover ratio fluctuated and eventually decreased to as low as 1.53 on March 31, 2023. This decline may suggest potential issues such as slower sales, overstocking, or inefficiencies in inventory management during this period.

Subsequently, there was a significant improvement in inventory turnover from December 31, 2023, to June 30, 2024, where the ratio increased substantially from 3.90 to 4.49. This surge indicates a positive turnaround in inventory management efficiency, with Albemarle Corp selling and replacing its inventory at a rapid rate.

Overall, it is essential for Albemarle Corp to closely monitor its inventory turnover ratio to ensure optimal inventory management and balance between stocking levels and sales demand. An effective inventory turnover ratio reflects the company's operational efficiency and can influence its overall financial performance and profitability.