Gilead Sciences Inc (GILD)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	6,251,000	5,804,000	5,657,000	6,601,000	4,572,000
Inventory	US$ in thousands	1,710,000	1,787,000	2,820,000	2,734,000	3,014,000
Inventory turnover		3.66	3.25	2.01	2.41	1.52

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $6,251,000K ÷ $1,710,000K
= 3.66

The inventory turnover ratio measures how efficiently a company is managing its inventory by showing how many times a company's inventory is sold and replaced within a specific period. Gilead Sciences Inc's inventory turnover has shown a positive upward trend over the past five years.

In 2020, Gilead Sciences Inc's inventory turnover was 1.52, indicating that the company sold and replaced its inventory approximately 1.52 times during that year. There was a significant increase in 2021, with the inventory turnover ratio rising to 2.41. This suggests an improvement in the company's inventory management efficiency.

However, in 2022, the inventory turnover ratio decreased slightly to 2.01. Despite this dip, the ratio remained above the 2020 level, indicating that the company was still managing its inventory more efficiently compared to the previous years.

The trend reversed in 2023, with the inventory turnover increasing to 3.25, showing a substantial improvement in inventory management efficiency. This positive trend continued in 2024, with the inventory turnover ratio further increasing to 3.66, signaling that Gilead Sciences Inc is effectively managing its inventory turnover and optimizing its working capital.

Overall, the increasing inventory turnover ratios over the five-year period suggest that Gilead Sciences Inc has made strides in managing its inventory effectively, selling and replenishing its inventory at a faster pace. This indicates improved efficiency in utilizing its resources and meeting consumer demand.