Illinois Tool Works Inc (ITW)

Inventory turnover

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cost of revenue (ttm)	US$ in thousands	9,445,000	9,433,000	9,485,000	9,533,000	9,549,000	9,414,000	9,139,000	8,910,000	8,592,000	8,298,000	8,112,000	7,543,000	7,375,000	7,397,000	7,494,000	7,999,000	8,187,000	8,261,000	8,350,000	8,482,000
Inventory	US$ in thousands	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	1,164,000	1,209,000	1,256,000	1,346,000
Inventory turnover		5.53	5.24	4.94	4.77	4.65	4.69	4.63	4.73	5.07	5.44	5.79	5.84	6.20	6.44	6.42	6.75	7.03	6.83	6.65	6.30

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $9,445,000K ÷ $1,707,000K
= 5.53

The inventory turnover of Illinois Tool Works, Inc. has exhibited a generally increasing trend over the past eight quarters, indicating more efficient management of inventory. In Q4 2023, the inventory turnover ratio was 5.46, which means that the company sold and replaced its inventory 5.46 times during the quarter. This is an improvement compared to the ratios in previous quarters, showing that the company is managing its inventory more effectively.

The highest inventory turnover ratio was observed in Q4 2023, suggesting that the company was able to sell its inventory quickly relative to the cost of goods sold during that quarter. A higher inventory turnover ratio is generally considered favorable as it implies that the company is selling goods quickly and minimizing the costs associated with excess inventory storage.

Overall, the increasing trend in inventory turnover ratios for Illinois Tool Works, Inc. indicates that the company has been successful in managing its inventory efficiently, potentially leading to improved cash flow and profitability.