Applied Materials Inc (AMAT)
Inventory turnover
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 16,276,000 | 15,670,000 | 13,929,000 | 10,979,000 | 8,222,000 |
| Inventory | US$ in thousands | 5,725,000 | 5,932,000 | 4,309,000 | 3,904,000 | 3,474,000 |
| Inventory turnover | 2.84 | 2.64 | 3.23 | 2.81 | 2.37 |
October 29, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $16,276,000K ÷ $5,725,000K
= 2.84
The inventory turnover ratio measures the efficiency of a company in managing its inventory and generating sales from such inventory. A higher inventory turnover ratio indicates that the company is selling its inventory more quickly.
Applied Materials Inc.'s inventory turnover has fluctuated over the past five years. In October 2023, the inventory turnover ratio was 2.47, which increased from 2.33 in October 2022. This suggests that the company improved its inventory management efficiency, as it was able to sell its inventory more frequently during the most recent period.
Comparing the current ratio to previous years, there was a dip in inventory turnover in October 2020 at 2.44, after which there was a slight recovery in October 2021 with a ratio of 2.82. However, this was followed by a marginal decline in October 2022, which has been disrupted by the increase in the most recent period.
Overall, the average inventory turnover ratio over the past five years has been 2.49, with a range from 2.82 in October 2021 to 2.33 in October 2022. This suggests that Applied Materials Inc. generally maintains a moderate level of efficiency in managing its inventory and generating sales from it.
When interpreting the inventory turnover ratio, it is also important to consider industry norms and the company's specific business model. For example, a lower inventory turnover ratio could indicate excess inventory levels, while a significantly higher ratio might suggest inventory shortages and lost sales opportunities. Therefore, further analysis of the company's inventory management policies and market dynamics would provide additional insight into the meaning and implications of the inventory turnover ratio.
Peer comparison
Oct 29, 2023