Align Technology Inc (ALGN)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	1,155,400	1,100,860	1,017,230	708,706	662,899
Inventory	US$ in thousands	296,902	338,752	230,230	139,237	112,051
Inventory turnover		3.89	3.25	4.42	5.09	5.92

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $1,155,400K ÷ $296,902K
= 3.89

The inventory turnover ratio for Align Technology, Inc. has exhibited fluctuations over the past five years. The ratio decreased from 5.92 in 2019 to 3.89 in 2023, indicating a decline in the efficiency of managing inventory. This suggests that the company took longer to sell its inventory in 2023 compared to previous years.

While a decreasing trend in inventory turnover may raise concerns about potential overstocking or slow-moving inventory, it is essential to consider industry norms and business strategies before drawing definite conclusions.

Factors such as market demand, production cycles, and supply chain disruptions can influence inventory turnover ratios. For Align Technology, Inc., it would be beneficial to further investigate the reasons behind the fluctuation in inventory turnover and assess whether adjustments in inventory management practices are necessary to enhance operational efficiency and financial performance.