Cognex Corporation (CGNX)

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	494,590	939,666	935,646	947,487	1,050,568	604,262	634,333	621,515	588,446	436,371	397,744	399,845	384,175	503,725	491,645	463,481	398,039	397,641	410,200	411,909
Inventory	US$ in thousands	162,285	133,866	126,226	127,147	122,480	108,553	96,012	136,660	113,102	81,170	68,503	61,392	60,830	53,860	52,953	54,985	60,261	65,264	72,889	79,208
Inventory turnover		3.05	7.02	7.41	7.45	8.58	5.57	6.61	4.55	5.20	5.38	5.81	6.51	6.32	9.35	9.28	8.43	6.61	6.09	5.63	5.20

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $494,590K ÷ $162,285K
= 3.05

The inventory turnover ratio for Cognex Corp. has shown a general decreasing trend over the past eight quarters, indicating a declining efficiency in managing its inventory. In the most recent quarter (Q4 2023), the ratio stood at 1.46, which means that the company's inventory turned over approximately 1.46 times during that period. This suggests that it took longer to sell through its inventory compared to previous quarters.

The highest inventory turnover ratio was observed in Q2 2022 at 3.25, reflecting a more efficient management of inventory during that period. However, since then, the ratio has been steadily decreasing. This downward trend may signal challenges in selling inventory or potentially an overstocking situation, which can tie up capital and impact profitability.

It is essential for Cognex Corp. to closely monitor and optimize its inventory management processes to improve its inventory turnover ratio and ensure that its inventory is efficiently utilized to generate sales. A lower inventory turnover ratio could also indicate potential risks such as obsolescence, deteriorating demand, or ineffective inventory control practices that may require attention and strategic adjustments.