Kennametal Inc (KMT)
Inventory turnover
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,419,810 | 1,431,740 | 1,364,480 | 1,288,960 | 1,355,830 |
| Inventory | US$ in thousands | 514,632 | 557,630 | 570,836 | 476,345 | 522,447 |
| Inventory turnover | 2.76 | 2.57 | 2.39 | 2.71 | 2.60 |
June 30, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $1,419,810K ÷ $514,632K
= 2.76
Inventory turnover is a critical efficiency ratio that measures how many times a company's inventory is sold and replaced over a specific period. In the case of Kennametal Inc, the trend in inventory turnover over the past five years has been relatively consistent, ranging from 2.39 to 2.76 times.
A higher inventory turnover ratio indicates that the company is managing its inventory effectively and efficiently converting its inventory into sales. Kennametal's inventory turnover has generally been between 2.57 and 2.76, suggesting that the company has been able to maintain a steady level of inventory efficiency.
On the other hand, a lower inventory turnover ratio can indicate inefficiencies in managing inventory, such as overstocking or obsolete inventory. However, as Kennametal's inventory turnover has not fallen below 2.39, it indicates that the company has been able to maintain a level of control over its inventory levels.
It is important for Kennametal to continue monitoring its inventory turnover ratio to ensure that it is maximizing its use of inventory and minimizing holding costs. Overall, based on the historical data provided, Kennametal has shown a steady and acceptable level of inventory turnover over the past five years.