Allegion PLC (ALLE)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,005,600 | 2,728,400 | 2,365,000 | 2,352,800 | 2,327,700 |
| Inventory | US$ in thousands | 438,500 | 479,000 | 380,400 | 283,100 | 269,900 |
| Inventory turnover | 6.85 | 5.70 | 6.22 | 8.31 | 8.62 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $3,005,600K ÷ $438,500K
= 6.85
Allegion plc's inventory turnover has shown variability over the past five years. The inventory turnover ratio measures how efficiently a company manages its inventory by indicating the number of times inventory is sold and replaced over a specific period. A higher inventory turnover ratio suggests efficient inventory management.
In 2023, Allegion plc's inventory turnover ratio stood at 4.72, indicating that its inventory was sold and replaced approximately 4.72 times during the year. This was an improvement from the previous year's ratio of 4.07 but lower than the ratios recorded in 2020 and 2019.
The increasing trend in inventory turnover from 2020 to 2021, followed by a decline in 2022, and a subsequent increase in 2023, suggests fluctuations in Allegion plc's inventory management efficiency. The company may have experienced changes in demand, production efficiency, or inventory control practices during these years.
It is essential for Allegion plc to continue monitoring and improving its inventory turnover ratio to ensure optimal use of resources and maintain healthy liquidity levels. A stable and ideally increasing inventory turnover ratio can signify effective inventory management, leading to improved financial performance and profitability in the long run.