Lear Corporation (LEA)

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 21,692,400 21,800,900 21,984,600 21,937,500 21,756,500 21,319,800 20,821,300 20,010,200 19,481,600 19,091,100 18,268,300 17,896,500 17,871,200 18,046,300 18,462,100 16,674,700 15,936,600 15,643,500 15,551,900 17,509,400
Inventory US$ in thousands 1,601,100 1,768,100 1,702,400 1,735,400 1,758,000 1,788,300 1,702,600 1,676,200 1,573,600 1,594,100 1,612,800 1,642,100 1,571,900 1,766,000 1,590,300 1,464,800 1,401,100 1,265,600 1,245,400 1,324,300
Inventory turnover 13.55 12.33 12.91 12.64 12.38 11.92 12.23 11.94 12.38 11.98 11.33 10.90 11.37 10.22 11.61 11.38 11.37 12.36 12.49 13.22

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $21,692,400K ÷ $1,601,100K
= 13.55

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory levels. For Lear Corporation, the inventory turnover has fluctuated over the reporting periods provided. The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory during the period.

Based on the data provided, Lear Corporation's inventory turnover ranged from a low of 10.22 in September 30, 2021, to a high of 13.55 in December 31, 2024. A higher inventory turnover ratio indicates that the company is selling its inventory more frequently within a specific period, which could be a positive sign of efficient inventory management.

Analyzing the trend, we can observe that the inventory turnover ratio generally increased from September 2021 to December 2024, with some fluctuations in between. This upward trend suggests that Lear Corporation has been improving its inventory management efficiency over time.

However, it is important to note that a very high inventory turnover ratio may also indicate that the company is facing inventory shortages, which could potentially lead to lost sales. On the other hand, a low inventory turnover ratio may signify overstocking or slow-moving inventory, tying up capital unnecessarily.

In conclusion, Lear Corporation has shown fluctuations in its inventory turnover ratio over the periods disclosed, but the overall trend suggests an improvement in inventory management efficiency. It is essential for the company to continue monitoring and optimizing its inventory turnover to strike a balance between having enough inventory to meet demand while minimizing excess holding costs.