Illinois Tool Works Inc (ITW)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Cost of revenue (ttm)	US$ in thousands	8,883,000	8,974,000	9,063,000	9,120,000	9,316,000	9,313,000	9,365,000	9,413,000	9,429,000	9,311,000	9,036,000	8,807,000	8,489,000	8,298,000	8,112,000	7,543,000	7,375,000	7,397,000	7,494,000	7,999,000
Inventory	US$ in thousands	1,605,000	1,817,000	1,819,000	1,825,000	1,707,000	1,799,000	1,921,000	2,000,000	2,054,000	2,007,000	1,975,000	1,883,000	1,694,000	1,524,000	1,400,000	1,292,000	1,189,000	1,149,000	1,167,000	1,185,000
Inventory turnover		5.53	4.94	4.98	5.00	5.46	5.18	4.88	4.71	4.59	4.64	4.58	4.68	5.01	5.44	5.79	5.84	6.20	6.44	6.42	6.75

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $8,883,000K ÷ $1,605,000K
= 5.53

The inventory turnover of Illinois Tool Works Inc has exhibited a decreasing trend over the period from March 31, 2020, to December 31, 2024. The inventory turnover, a measure of how many times a company sells and replaces its inventory during a specific period, declined from 6.75 to 5.53 during this period. A declining inventory turnover ratio may indicate slow-moving inventory, overstocking, or inefficient inventory management.

The downward trend in inventory turnover suggests that Illinois Tool Works Inc may be facing challenges in efficiently managing its inventory levels. A lower inventory turnover ratio can lead to increased carrying costs, risk of obsolescence, and potential write-downs of excess inventory. Therefore, it is crucial for the company to assess its inventory management practices and seek ways to improve operational efficiency to optimize inventory turnover and enhance overall profitability.