Johnson & Johnson (JNJ)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	54,349,000	50,533,000	60,455,000	55,691,000	55,596,000
Inventory	US$ in thousands	11,181,000	10,268,000	10,387,000	9,344,000	9,020,000
Inventory turnover		4.86	4.92	5.82	5.96	6.16

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $54,349,000K ÷ $11,181,000K
= 4.86

Inventory turnover is a crucial financial ratio that measures how efficiently a company manages its inventory. Johnson & Johnson's inventory turnover has shown a declining trend over the past five years. The inventory turnover ratio decreased from 3.05 in 2019 to 2.37 in 2023.

This decreasing trend may indicate that Johnson & Johnson is holding onto its inventory for a longer period, which could lead to potential issues such as tying up cash in unsold inventory, higher carrying costs, and potential obsolescence risks.

A lower inventory turnover ratio may also suggest that Johnson & Johnson is facing challenges in selling its products quickly, possibly due to changing market demand, production inefficiencies, or ineffective inventory management practices.

Overall, a decreasing inventory turnover ratio for Johnson & Johnson's could be a cause for concern as it indicates potential inefficiencies in managing its inventory efficiently. Keeping an eye on this ratio and implementing strategies to improve inventory turnover could help enhance the company's overall financial performance and competitiveness in the market.