Federal Signal Corporation (FSS)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	1,272,500	1,089,900	924,500	837,200	898,500
Inventory	US$ in thousands	303,400	292,700	229,100	185,000	182,900
Inventory turnover		4.19	3.72	4.04	4.53	4.91

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $1,272,500K ÷ $303,400K
= 4.19

Federal Signal Corp.'s inventory turnover has shown some variability over the past five years. The trend indicates a slight decline from 4.91 in 2019 to 4.19 in 2023, with fluctuations in between. A high inventory turnover ratio typically suggests efficient management of inventory and indicates that the company is selling its products quickly.

In the context of Federal Signal Corp., the downward trend in inventory turnover may raise concerns about the company's ability to effectively manage its inventory levels or optimize its supply chain. A lower inventory turnover ratio could imply potential overstocking or sluggish sales, which may lead to increased carrying costs and obsolescence risks.

Further analysis of the company's inventory management practices and demand forecasting accuracy could provide insights into the reasons behind the fluctuations in inventory turnover ratio. Investors and stakeholders should closely monitor this metric to assess the company's operational efficiency and inventory management strategies.