Eaton Corporation PLC (ETN)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 14,762,000 | 13,865,000 | 13,293,000 | 12,408,000 | 14,338,000 |
| Inventory | US$ in thousands | 3,739,000 | 3,430,000 | 2,969,000 | 2,109,000 | 2,805,000 |
| Inventory turnover | 3.95 | 4.04 | 4.48 | 5.88 | 5.11 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $14,762,000K ÷ $3,739,000K
= 3.95
Inventory turnover is a key financial ratio that measures how many times a company's inventory is sold and replaced within a specific period. In the case of Eaton Corporation plc, the inventory turnover ratio has been fluctuating over the past five years.
In 2023, the inventory turnover ratio decreased to 3.95 from 4.04 in 2022, indicating that the company's inventory was sold and replaced approximately 3.95 times during the year. This decrease suggests that Eaton Corporation plc may have experienced slower sales or higher levels of inventory compared to the previous year.
Comparing the latest ratio to the trend over the last five years, it is evident that the inventory turnover ratio has been on a downward trajectory since 2020 when it peaked at 5.88. This decreasing trend may indicate potential issues such as poor inventory management, overstocking, or declining sales efficiency. It is crucial for the company to closely monitor its inventory turnover ratio to ensure optimal inventory levels and efficient operations.
Peer comparison
Dec 31, 2023