Leggett & Platt Incorporated (LEG)
Inventory turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,634,500 | 3,871,500 | 4,169,900 | 4,034,300 | 3,385,700 |
| Inventory | US$ in thousands | 722,600 | 819,700 | 907,500 | 993,200 | 645,500 |
| Inventory turnover | 5.03 | 4.72 | 4.59 | 4.06 | 5.25 |
December 31, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $3,634,500K ÷ $722,600K
= 5.03
The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times in a year the company sells and replaces its inventory. For Leggett & Platt Incorporated, the inventory turnover ratio has fluctuated over the past five years:
- In December 31, 2020, the inventory turnover ratio was 5.25, indicating that the company turned over its inventory 5.25 times during the year.
- By December 31, 2021, the inventory turnover ratio decreased to 4.06, suggesting a decline in the rate at which inventory was sold and replaced.
- In December 31, 2022, the ratio improved to 4.59, showing a slight increase in the efficiency of inventory management compared to the previous year.
- The inventory turnover ratio continued to increase to 4.72 by December 31, 2023, indicating further improvement in inventory turnover.
- By December 31, 2024, the inventory turnover ratio reached 5.03, demonstrating that the company was able to sell and replace its inventory more than five times during the year.
Overall, Leggett & Platt Incorporated's inventory turnover ratio has shown fluctuations over the years, with some improvements in inventory management efficiency. It is important for the company to maintain an optimal balance between carrying too much inventory, which ties up capital, and carrying too little inventory, which may result in stockouts and lost sales. Monitoring and analyzing the inventory turnover ratio helps the company make effective inventory management decisions to support its operations and financial performance.
Peer comparison
Dec 31, 2024