American States Water Company (AWR)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	178,181	175,603	171,542	169,660	169,090	160,805	158,505	159,359	160,964	161,526	163,976	165,095	161,015	168,698	168,439	166,045	165,031	175,456	164,887	159,796
Inventory	US$ in thousands	15,140	16,421	16,969	16,225	17,574	16,218	16,822	16,282	14,623	13,444	13,151	11,943	12,163	10,240	8,773	8,751	8,619	8,699	8,168	7,343
Inventory turnover		11.77	10.69	10.11	10.46	9.62	9.92	9.42	9.79	11.01	12.01	12.47	13.82	13.24	16.47	19.20	18.97	19.15	20.17	20.19	21.76

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $178,181K ÷ $15,140K
= 11.77

The inventory turnover ratio for American States Water Company indicates how efficiently the company is managing its inventory. The ratio is calculated by dividing the cost of goods sold by the average inventory balance. A higher inventory turnover ratio is generally preferred as it suggests that inventory is being sold quickly, minimizing storage costs and potential obsolescence.

Based on the provided data, we can observe a gradual decline in American States Water Company's inventory turnover ratio over the quarters from March 31, 2020, to December 31, 2024. The ratio has decreased from 21.76 to 11.77 during this period, indicating a decreasing efficiency in managing inventory.

A high inventory turnover typically signifies strong sales or efficient inventory management practices. In contrast, a declining inventory turnover ratio may suggest overstocking, slowing sales, or challenges in inventory management. It is important for the company to assess the reasons behind this decreasing trend and take necessary actions to improve inventory turnover efficiency.

Overall, the declining trend in American States Water Company's inventory turnover ratio highlights the importance of closely monitoring inventory levels and implementing strategies to enhance inventory management efficiency.