Fortinet Inc (FTNT)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	3,473,400	2,963,300	2,290,700	1,774,700	1,545,800
Inventory	US$ in thousands	484,800	264,600	175,800	139,800	117,900
Inventory turnover		7.16	11.20	13.03	12.69	13.11

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $3,473,400K ÷ $484,800K
= 7.16

Inventory turnover measures how efficiently a company manages its inventory by assessing how many times in a year the company sells and replaces its inventory.

Over the past five years, Fortinet Inc's inventory turnover has fluctuated. In 2023, the inventory turnover ratio decreased to 2.55, indicating that the company is selling and replacing its inventory at a slower pace compared to the previous year. This decline could be indicative of potential inventory management issues, such as overstocking, slow-moving inventory, or inefficiencies in the supply chain.

In 2022, the inventory turnover ratio was 4.10, showing an improvement from the previous year. This suggests that Fortinet Inc was more effective in managing its inventory in 2022, selling and replacing it more frequently.

The highest inventory turnover was observed in 2021, with a ratio of 4.45. This indicates that the company efficiently turned over its inventory, potentially reducing carrying costs and minimizing the risk of obsolescence.

In 2020 and 2019, the inventory turnover ratios were 4.08 and 4.29, respectively. These figures suggest that Fortinet Inc maintained a relatively consistent pace of selling and restocking its inventory during those years.

Overall, the trend in Fortinet Inc's inventory turnover implies varying levels of efficiency in managing inventory over the past five years. Decreases in the turnover ratio may warrant further investigation into the company's inventory management practices to identify areas for improvement.