Smith AO Corporation (AOS)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,126,800 | 3,108,000 | 2,941,700 | 2,469,600 | 2,543,400 |
| Inventory | US$ in thousands | 497,400 | 516,400 | 447,700 | 300,100 | 303,000 |
| Inventory turnover | 6.29 | 6.02 | 6.57 | 8.23 | 8.39 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $3,126,800K ÷ $497,400K
= 6.29
A.O. Smith Corp.'s inventory turnover has exhibited a decreasing trend over the past five years. The inventory turnover ratio decreased from 5.98 in 2019 to 4.76 in 2023. This indicates that the company's efficiency in managing its inventory has declined. A lower inventory turnover ratio suggests that the company is holding on to its inventory for a longer period before selling it, which could tie up capital and potentially lead to higher carrying costs.
It is important for A.O. Smith Corp. to closely monitor and improve its inventory management processes to enhance efficiency and profitability. By optimizing inventory turnover, the company can free up capital, reduce carrying costs, and better respond to changes in customer demand. Further analysis and actions may be necessary to address the declining trend in the inventory turnover ratio and improve overall operational efficiency.
Peer comparison
Dec 31, 2023