FormFactor Inc (FORM)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	456,107	440,433	419,511	404,379	404,522	425,077	435,106	447,470	444,050	438,705	436,131	439,927	446,907	450,897	442,399	422,263	405,696	390,591	374,630	365,639
Inventory	US$ in thousands	101,676	105,374	114,814	108,774	111,685	111,626	120,298	116,553	123,157	132,029	143,475	125,590	111,548	115,104	111,890	104,727	99,229	94,616	87,813	78,983
Inventory turnover		4.49	4.18	3.65	3.72	3.62	3.81	3.62	3.84	3.61	3.32	3.04	3.50	4.01	3.92	3.95	4.03	4.09	4.13	4.27	4.63

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $456,107K ÷ $101,676K
= 4.49

FormFactor Inc's inventory turnover ratio measures how efficiently the company manages its inventory by calculating the number of times its inventory is sold and replaced during a specific period. A higher inventory turnover ratio indicates that the company is selling goods quickly and efficiently, while a lower ratio may suggest slow-moving or excess inventory.

Analyzing the trend in FormFactor Inc's inventory turnover ratio from March 31, 2020, to December 31, 2024, shows fluctuations in the efficiency of managing its inventory. The ratio decreased from 4.63 on March 31, 2020, to 3.65 on June 30, 2024, before increasing to 4.49 by December 31, 2024. Overall, the company's inventory turnover ratio has varied within the range of 3.04 to 4.63 during this period.

The declining trend in the inventory turnover ratio may indicate inefficiencies in inventory management, such as slow sales, overstocking, or obsolete inventory. Conversely, an increasing ratio suggests improved inventory management efficiency.

It is essential for FormFactor Inc to closely monitor its inventory turnover ratio to ensure optimal inventory levels, minimize carrying costs, prevent stockouts, and maximize profitability. Any significant deviations from the historical trend should be thoroughly evaluated to identify and address potential issues affecting the company's inventory management practices.