APA Corporation (APA)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	569,000	607,000	702,000	4,953,000	3,818,000
Inventory	US$ in thousands	439,000	425,000	438,000	492,000	502,000
Inventory turnover		1.30	1.43	1.60	10.07	7.61

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $569,000K ÷ $439,000K
= 1.30

The inventory turnover ratio for APA Corporation has been consistently calculated as 0.00 for the past five years (from 2019 to 2023). This indicates that the company is not efficiently managing its inventory levels in relation to its sales. A low or zero inventory turnover ratio suggests that the company may be holding excessive levels of inventory in comparison to the sales generated.

A consistently low inventory turnover ratio can have negative implications for the company, such as tying up capital in unsold inventory, incurring storage costs, and potentially facing obsolescence risks. It may also signal that the company is facing challenges in accurately forecasting demand, leading to overstocking or slow-moving inventory.

APA Corporation may need to reassess its inventory management practices, such as optimizing ordering and replenishment processes, monitoring demand trends closely, and implementing better inventory control systems. Improving inventory turnover can help enhance cash flow, reduce carrying costs, and maximize profitability by better aligning inventory levels with actual sales.