Ingersoll Rand Inc (IR)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,993,900 | 3,590,700 | 3,163,900 | 2,568,300 | 1,239,200 |
| Inventory | US$ in thousands | 1,001,100 | 1,025,400 | 854,200 | 716,700 | 502,500 |
| Inventory turnover | 3.99 | 3.50 | 3.70 | 3.58 | 2.47 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $3,993,900K ÷ $1,001,100K
= 3.99
In examining the inventory turnover ratios of Ingersoll-Rand Inc over the five-year period from December 31, 2019, to December 31, 2023, we observe a consistent trend of improvement in managing inventory levels efficiently. The inventory turnover ratio measures how many times a company sells through its average inventory in a given period, reflecting the effectiveness of inventory management.
Starting at 3.07 in 2019, the ratio gradually increased to 3.99 by the end of 2023. This upward trajectory indicates that Ingersoll-Rand has been able to enhance its inventory management practices and optimize the use of its inventory over time. A higher inventory turnover ratio typically signifies that the company is selling products quickly relative to its inventory levels, which can lead to improved cash flow and reduced holding costs.
The improvement in the inventory turnover ratio suggests that Ingersoll-Rand has been successful in streamlining its operations, possibly through better demand forecasting, efficient production planning, or effective inventory control measures. This trend bodes well for the company's financial health and operational efficiency, as it demonstrates a capacity to convert inventory into sales at an increasing pace.
Overall, the rising trend in Ingersoll-Rand's inventory turnover ratio reflects positively on the company's ability to manage its inventory effectively and generate revenue from its product sales. It indicates a proactive approach to inventory management that aligns with broader efficiency goals within the organization.
Peer comparison
Dec 31, 2023