CTS Corporation (CTS)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	359,563	376,331	328,306	285,003	311,424
Inventory	US$ in thousands	60,031	62,260	49,506	45,870	42,237
Inventory turnover		5.99	6.04	6.63	6.21	7.37

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $359,563K ÷ $60,031K
= 5.99

The inventory turnover ratio for CTS Corp. has exhibited a decreasing trend over the past five years from 7.37 in 2019 to 5.99 in 2023. This indicates that the company is selling its inventory at a slower pace relative to the quantity of inventory it holds. The declining trend may be a result of various factors such as changing customer demand, production inefficiencies, or suboptimal inventory management practices.

A lower inventory turnover ratio suggests that the company may be facing challenges in converting its inventory into sales efficiently, potentially leading to excess or obsolete inventory levels. On the other hand, a relatively stable range of 5.99 to 6.63 over the last three years could indicate a degree of consistency in managing inventory levels and sales volume.

It is essential for CTS Corp. to closely monitor its inventory turnover ratio and identify the underlying reasons for the trend to optimize its inventory management practices, improve cash flow, and enhance overall operational efficiency in the future.