Commercial Metals Company (CMC)

Inventory turnover

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Cost of revenue	US$ in thousands	7,677,410	7,630,300	6,142,150	5,089,520	5,492,270
Inventory	US$ in thousands	1,035,580	1,169,700	935,387	625,393	692,368
Inventory turnover		7.41	6.52	6.57	8.14	7.93

August 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $7,677,410K ÷ $1,035,580K
= 7.41

The inventory turnover ratio measures how efficiently a company manages its inventory by evaluating the number of times inventory is sold and replaced over a specific period. Analyzing Commercial Metals Co.'s inventory turnover over the last five years shows a consistent performance in managing its inventory. The trend indicates that the company has been able to maintain a relatively high turnover rate, which suggests effective inventory management.

In 2023, the inventory turnover ratio increased to 6.75 from 6.03 in the previous year, indicating an improvement in inventory management efficiency. This rise could be attributed to better inventory control and management practices, which allowed the company to sell and replace its inventory more frequently.

While in 2021, the inventory turnover ratio remained relatively stable at 6.01, the company experienced a significant decline in 2020 to 7.25 from 7.26 in 2019. This slight decrease in inventory turnover could be indicative of a change in the company's sales patterns or a temporary disruption in its supply chain and operations. However, it's important to note that the inventory turnover ratio remained above 6 during these years, signifying strong inventory management capabilities.

Overall, Commercial Metals Co. has maintained a healthy and consistent inventory turnover ratio over the past five years, demonstrating effective management of its inventory levels, and efficient sales and replenishment processes.