Freshpet Inc (FRPT)

Inventory turnover

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cost of revenue US$ in thousands 579,221 516,023 409,311 263,343 185,880
Inventory US$ in thousands 80,794 63,238 58,290 35,574 19,119
Inventory turnover 7.17 8.16 7.02 7.40 9.72

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $579,221K ÷ $80,794K
= 7.17

An analysis of Freshpet Inc’s inventory turnover ratios over the period from December 31, 2020, to December 31, 2024, reveals an overall fluctuation in the efficiency with which the company manages its inventory.

At the close of 2020, the inventory turnover stood at 9.72, indicating a relatively high level of inventory efficiency, with the company selling and replenishing its inventory approximately 9.72 times within the year. This ratio decreased markedly to 7.40 by the end of 2021, reflecting a reduction in inventory management efficiency. The decline continued into 2022, with the ratio falling further to 7.02, suggesting that inventory sales and replenishment cycles lengthened, potentially due to factors such as increased inventory levels, slower sales, or supply chain adjustments.

In 2023, the ratio experienced an improvement, rising to 8.16, indicating a partial recovery in inventory turnover and a more effective inventory management cycle compared to previous years. However, this figure declined again slightly in 2024 to 7.17, which indicates a marginal decrease in efficiency compared to 2023, but still an improvement over the 2022 figure.

Overall, the data illustrates a period of volatility in inventory efficiency, with the highest turnover observed at the end of 2020 and a generally declining trend in the subsequent years until 2022, followed by a modest recovery. This pattern may reflect underlying operational, market, or supply chain dynamics influencing Freshpet Inc’s ability to convert inventory into sales efficiently during this timeframe.