FormFactor Inc (FORM)

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	509,882	542,958	562,648	576,612	608,780	593,753	582,712	586,221	594,433	603,884	595,717	567,216	548,785	522,103	499,764	495,152	479,008	456,396	453,398	448,837
Inventory	US$ in thousands	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	83,258	85,989	83,852	83,216
Inventory turnover		4.57	4.86	4.68	4.95	4.94	4.50	4.06	4.67	5.33	5.25	5.32	5.42	5.53	5.52	5.69	6.27	5.75	5.31	5.41	5.39

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $509,882K ÷ $111,685K
= 4.57

FormFactor Inc's inventory turnover has shown a fluctuating trend over the past five years. The inventory turnover ratio indicates how efficiently the company is managing its inventory by measuring the number of times inventory is sold and replaced during the period.

From December 2019 to December 2023, the inventory turnover ratio ranged from 4.06 to 6.27, with an average of approximately 5.29. A higher inventory turnover ratio generally signifies that the company is selling its products quickly and efficiently.

The trend in FormFactor Inc's inventory turnover indicates a moderate level of consistency in managing inventory levels, with some variability from quarter to quarter. The company's ability to maintain a relatively stable inventory turnover ratio around the average value implies efficient inventory management practices.

However, it is essential to note that a high inventory turnover ratio may also suggest that the company may be facing challenges in accurately forecasting demand or could be running the risk of stockouts. On the other hand, a lower ratio could indicate overstocking or slow-moving inventory.

Overall, a detailed analysis of the factors affecting inventory turnover, including supply chain efficiency, demand forecasting accuracy, and inventory management strategies, can provide deeper insights into FormFactor Inc's operational effectiveness and financial performance.