Amgen Inc (AMGN)

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	17,897,000	15,417,000	15,037,000	14,661,000	14,416,000	14,238,000	14,291,000	14,498,000	14,470,000	12,524,000	10,848,000	8,961,000	7,343,000	7,015,000	6,445,000	5,968,000	5,514,000	5,270,000	5,391,000	5,486,000
Inventory	US$ in thousands	9,518,000	5,026,000	4,978,000	5,011,000	4,930,000	4,757,000	4,554,000	4,411,000	4,086,000	4,152,000	4,115,000	4,017,000	3,893,000	3,942,000	3,840,000	3,682,000	3,584,000	3,243,000	3,176,000	3,016,000
Inventory turnover		1.88	3.07	3.02	2.93	2.92	2.99	3.14	3.29	3.54	3.02	2.64	2.23	1.89	1.78	1.68	1.62	1.54	1.63	1.70	1.82

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $17,897,000K ÷ $9,518,000K
= 1.88

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory by indicating the number of times inventory is sold or replaced during a specific period. A higher inventory turnover ratio generally suggests efficient inventory management, while a lower ratio may indicate slow sales, overstocking, or obsolete inventory.

Analyzing the data provided for AMGEN Inc., we observe that the inventory turnover ratios have fluctuated over the past eight quarters. In Q4 2023, the inventory turnover ratio was 0.89, which was below the ratios seen in the preceding quarters. This could indicate a decrease in sales activity or potential inventory management challenges during this quarter.

In Q3 and Q2 2023, the inventory turnover ratios improved to 1.41 and 1.38, respectively, suggesting enhanced efficiency in inventory management compared to Q4 2023. However, the ratio decreased slightly to 1.31 in Q1 2023, indicating a potential slowdown in the rate at which inventory was being sold or replaced.

Comparing the most recent data to the same quarter in the previous year, we can see a general trend of decreasing inventory turnover ratios from Q1 2022 to Q4 2023. This downward trend may raise concerns about the company's ability to manage its inventory effectively and optimize working capital.

In summary, AMGEN Inc.'s inventory turnover ratios have shown variability over the analyzed period, with some quarters demonstrating better inventory management efficiency than others. It is important for the company to closely monitor these ratios, identify any potential issues affecting inventory turnover, and implement strategies to improve inventory management practices for sustainable growth and profitability.