Caterpillar Inc (CAT)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 42,767,000 | 41,350,000 | 35,513,000 | 29,082,000 | 36,630,000 |
| Inventory | US$ in thousands | 16,565,000 | 16,270,000 | 14,038,000 | 11,402,000 | 11,266,000 |
| Inventory turnover | 2.58 | 2.54 | 2.53 | 2.55 | 3.25 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $42,767,000K ÷ $16,565,000K
= 2.58
Inventory turnover is a key efficiency ratio that indicates how many times a company's inventory is sold and replaced over a specific period. Analyzing Caterpillar Inc.'s inventory turnover from 2019 to 2023 shows a declining trend. In 2019, Caterpillar had an inventory turnover of 3.25, indicating that its inventory turned over approximately 3.25 times during that year. However, in subsequent years, the inventory turnover decreased, reaching 2.58 in 2023.
A decreasing inventory turnover may imply that Caterpillar is taking more time to sell its inventory or is holding more inventory relative to its sales. This could potentially signal issues with inventory management, such as overstocking or slowing sales. A lower inventory turnover ratio may also indicate inefficiencies in production or supply chain management, leading to excess inventory levels.
It is important for Caterpillar Inc. to closely monitor its inventory turnover and take necessary steps to optimize inventory management processes to ensure efficient operations and maximize profitability. Regularly reviewing and adjusting inventory levels, improving forecasting accuracy, and streamlining supply chain operations can help in enhancing inventory turnover and overall operational efficiency.
Peer comparison
Dec 31, 2023