Laboratory Corporation of America Holdings (LH)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 8,796,700 | 8,155,000 | 10,496,600 | 9,025,700 | 8,302,300 |
| Inventory | US$ in thousands | 474,600 | 470,600 | 401,400 | 423,200 | 244,700 |
| Inventory turnover | 18.53 | 17.33 | 26.15 | 21.33 | 33.93 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $8,796,700K ÷ $474,600K
= 18.53
The inventory turnover ratio for Laboratory Corp. Of America Holdings has displayed a fluctuating trend over the last five years. In 2019, the company had the highest inventory turnover ratio of 33.93, indicating that its inventory was turning over approximately 33.93 times during the year. Subsequently, the ratio decreased to 21.33 in 2020, before increasing to 26.15 in 2021. This was followed by a further increase to 22.29 in 2022, and a decrease to 18.53 in 2023.
The decline in inventory turnover ratio from 2019 to 2023 could imply several factors such as changes in sales volume, inventory management practices, or industry demand fluctuations. A lower inventory turnover ratio may suggest that the company is holding onto inventory for a longer period, which could tie up capital and increase storage costs. It is essential for the company to effectively manage its inventory levels to optimize its working capital and minimize the risk of obsolescence.
Overall, a decreasing trend in inventory turnover ratio warrants further investigation to identify the underlying reasons and implement strategies to enhance inventory management efficiency and overall financial performance.
Peer comparison
Dec 31, 2023