AutoZone Inc (AZO)

Inventory turnover

		Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020	Aug 31, 2019
Cost of revenue	US$ in thousands	8,386,790	7,779,580	6,911,800	5,861,210	5,498,740
Inventory	US$ in thousands	5,764,140	5,638,000	4,639,810	4,473,280	4,319,110
Inventory turnover		1.45	1.38	1.49	1.31	1.27

August 26, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $8,386,790K ÷ $5,764,140K
= 1.45

Inventory turnover is a crucial ratio for understanding how efficiently Autozone Inc. manages its inventory. It measures the number of times the company's inventory is sold and replaced over a specific period. A higher ratio indicates that the company is selling inventory quickly and efficiently, while a lower ratio may suggest sluggish sales or overstocking.

Looking at Autozone Inc.'s inventory turnover over the past five years, we can observe a fluctuating trend. In 2019, the inventory turnover was 1.27, indicating that the inventory was turned over approximately 1.27 times during that year. Subsequently, the ratio increased to 1.31 in 2020 before further rising to 1.49 in 2021, suggesting an improvement in inventory management and sales efficiency during those years.

However, in 2022, the inventory turnover slightly decreased to 1.38, although it remained relatively close to the 2021 figure. This fluctuation might indicate some stability in the pace of inventory turnover. In 2023, the inventory turnover increased to 1.45, indicating a slight improvement from the previous year but not reaching the peak of 2021.

In general, although there have been fluctuations, Autozone Inc. has maintained a relatively stable inventory turnover over the past five years. This suggests that the company has been effectively managing its inventory and has been able to sell and replace its inventory multiple times during the year.

In conclusion, while it's essential to explore the reasons behind these fluctuations, Autozone Inc.'s consistent inventory turnover indicates efficient inventory management, allowing the company to balance the risk of stockouts with the cost of carrying excess inventory.