Federal Signal Corporation (FSS)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	1,328,500	1,272,500	1,089,900	924,500	837,200
Inventory	US$ in thousands	331,000	303,400	292,700	229,100	185,000
Inventory turnover		4.01	4.19	3.72	4.04	4.53

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $1,328,500K ÷ $331,000K
= 4.01

The inventory turnover ratio of Federal Signal Corporation has shown some fluctuations over the past five years. In December 2020, the inventory turnover was 4.53, indicating that the company turned over its inventory approximately 4.53 times during that year.

However, by December 2021, the inventory turnover ratio declined to 4.04, suggesting a decrease in the efficiency of inventory management. The ratio continued to decrease to 3.72 by December 2022, a further decline in inventory turnover.

However, there was a slight improvement in December 2023, with the inventory turnover ratio increasing to 4.19, indicating a better utilization of inventory during that year. This improvement was not sustained as by December 2024, the inventory turnover ratio decreased again to 4.01.

Overall, the trend in Federal Signal Corporation's inventory turnover indicates some fluctuation in the efficiency of managing its inventory levels over the five-year period. Lower inventory turnover ratios may suggest excess inventory or potential inefficiencies in inventory management, which could impact the company's liquidity and profitability. Monitoring and improving inventory turnover can be crucial for optimizing operational efficiency and financial performance.