Smith AO Corporation (AOS)
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 | 3,126,800 | 3,076,900 | 3,045,400 | 3,087,200 | 3,108,000 | 3,170,200 | 3,197,400 | 3,110,700 | 2,941,700 | 2,806,400 | 2,678,400 | 2,545,300 | 2,469,600 | 2,425,100 | 2,417,500 | 2,474,500 | 2,543,400 | 2,574,400 | 2,583,800 | 2,637,900 |
| Inventory | US$ in thousands | 497,400 | 519,000 | 508,500 | 503,700 | 516,400 | 525,600 | 493,000 | 488,700 | 447,700 | 357,700 | 330,400 | 312,800 | 300,100 | 302,600 | 306,000 | 312,300 | 303,000 | 310,000 | 323,100 | 319,700 |
| Inventory turnover | 6.29 | 5.93 | 5.99 | 6.13 | 6.02 | 6.03 | 6.49 | 6.37 | 6.57 | 7.85 | 8.11 | 8.14 | 8.23 | 8.01 | 7.90 | 7.92 | 8.39 | 8.30 | 8.00 | 8.25 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $3,126,800K ÷ $497,400K
= 6.29
Over the past eight quarters, A.O. Smith Corp. has maintained a relatively consistent inventory turnover ratio, with values ranging from 4.50 to 5.02. The inventory turnover ratio measures the efficiency of inventory management by indicating how many times during a period the company sells and replaces its inventory. A higher turnover ratio generally indicates more efficient inventory management and a lower risk of obsolete inventory.
The average inventory turnover for A.O. Smith Corp. over these quarters is approximately 4.77, suggesting that the company has been effective in managing its inventory levels and converting inventory into sales. However, the slight fluctuations in the ratio over time may indicate changes in demand, production efficiency, or inventory management practices.
In Q2 2022, the company achieved its highest inventory turnover of 5.02, indicating a peak in efficiency during that period. Conversely, the lowest turnover ratio of 4.50 was recorded in Q3 2023, reflecting potentially slower inventory movement relative to sales.
Overall, A.O. Smith Corp. appears to have a healthy inventory turnover ratio, demonstrating its ability to efficiently manage inventory levels and meet customer demand while minimizing holding costs and the risk of inventory obsolescence. However, continued monitoring and fine-tuning of inventory management practices may be necessary to sustain and potentially improve this aspect of operational efficiency.
Peer comparison
Dec 31, 2023
Dec 31, 2023