Costco Wholesale Corp (COST)
Inventory turnover
| Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 234,345,000 | 219,407,000 | 189,271,000 | 161,357,000 | 136,238,000 |
| Inventory | US$ in thousands | 16,651,000 | 17,907,000 | 14,215,000 | 12,242,000 | 11,395,000 |
| Inventory turnover | 14.07 | 12.25 | 13.31 | 13.18 | 11.96 |
September 3, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $234,345,000K ÷ $16,651,000K
= 14.07
Costco Wholesale Corp's inventory turnover ratio measures the efficiency with which the company manages its inventory. The inventory turnover ratio indicates how many times the company's inventory is sold and replaced over a specific period. A higher inventory turnover ratio generally indicates that the company is managing its inventory more effectively.
Over the past five years, Costco's inventory turnover has demonstrated a consistent upward trend. In the most recent period ending September 3, 2023, the inventory turnover ratio was 12.77, which indicates that the company's inventory was turned over approximately 12.77 times during the year. This represents an improvement from 11.13 in August 2022 and 12.01 in August 2021.
The increasing trend in inventory turnover is a positive sign, suggesting that Costco has been managing its inventory more efficiently. A higher inventory turnover can be indicative of effective inventory management practices, such as accurate demand forecasting, streamlined supply chain operations, and keeping lower levels of excess inventory.
However, it's essential to consider seasonality and potential industry-specific factors that may influence inventory turnover. Additionally, a very high inventory turnover ratio may indicate a risk of potential stockouts or the possibility that the company is carrying too little inventory to meet demand.
In conclusion, Costco's increasing inventory turnover ratio over the past five years reflects positively on the company's ability to efficiently manage its inventory. This trend may indicate effective inventory control and operational efficiency within the company's supply chain.
Peer comparison
Sep 3, 2023