Lumentum Holdings Inc (LITE)
Inventory turnover
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,641,600 | 1,718,000 | 1,277,100 | 1,295,000 | 396,200 |
| Inventory | US$ in thousands | 398,400 | 408,600 | 250,100 | 196,400 | 188,900 |
| Inventory turnover | 4.12 | 4.20 | 5.11 | 6.59 | 2.10 |
June 30, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $1,641,600K ÷ $398,400K
= 4.12
Inventory turnover measures how efficiently a company manages its inventory by indicating the number of times it sells and replaces its inventory during a specific period. Looking at Lumentum Holdings Inc's inventory turnover over the past five years, we observe a fluctuating trend.
In 2020, the inventory turnover was relatively low at 2.10, indicating a longer time taken to sell and replace inventory. This improved significantly in 2021 to 6.59, showing a more efficient management of inventory. However, in the following years, the turnover ratio decreased to 5.11 in 2022 and further to 4.20 in 2023 before reaching 4.12 in 2024.
The decreasing trend in inventory turnover from 2021 to 2024 suggests that Lumentum Holdings Inc may have been holding excess inventory relative to its sales volume, or facing difficulties in moving its inventory efficiently. A lower inventory turnover ratio may indicate challenges in managing inventory levels, potential obsolescence, or excess stocking leading to increased holding costs.
It is essential for Lumentum Holdings Inc to analyze these fluctuations in inventory turnover to optimize inventory levels, enhance cash flow, and improve operational efficiency. By addressing any underlying issues impacting inventory turnover, the company can strive for a better balance between inventory management and sales performance.
Peer comparison
Jun 30, 2024