Diodes Incorporated (DIOD)

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	1,291,018	1,387,261	1,447,781	1,472,341	1,485,448	1,484,540	1,470,771	1,448,343	1,425,165	1,345,311	1,230,443	1,122,195	1,016,518	919,537	925,327	941,195	947,992	1,010,273	1,010,283	1,002,467
Inventory	US$ in thousands	389,774	343,694	325,733	341,941	360,281	374,811	371,351	370,045	348,622	322,088	304,128	289,972	307,062	260,289	255,828	307,062	236,472	230,815	222,969	216,569
Inventory turnover		3.31	4.04	4.44	4.31	4.12	3.96	3.96	3.91	4.09	4.18	4.05	3.87	3.31	3.53	3.62	3.07	4.01	4.38	4.53	4.63

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,291,018K ÷ $389,774K
= 3.31

Diodes, Inc. has shown a general trend of decreasing inventory turnover over the past four quarters, with the ratio declining from 3.26 in Q4 2022 to 2.57 in Q4 2023. This indicates that the company has been holding onto its inventory for a longer period of time, which may tie up working capital and increase the risk of obsolescence.

Although there was a slight increase in inventory turnover in Q3 and Q2 2023, reaching 3.15 and 3.49, respectively, the ratio dropped again in Q4 2023. Overall, the average inventory turnover for the past eight quarters stands at 3.12, suggesting that Diodes, Inc. on average sells and replenishes its inventory approximately three times a year.

It is important for the company to closely monitor its inventory management practices to ensure optimal levels that align with sales and production demands. A lower inventory turnover ratio may indicate inefficiencies in inventory management, such as overstocking or slow-moving inventory, which can impact cash flow and profitability.