LKQ Corporation (LKQ)
Inventory turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 8,744,000 | 8,291,000 | 7,571,000 | 7,766,070 | 7,035,560 |
| Inventory | US$ in thousands | 3,220,000 | 3,121,000 | 2,752,000 | 2,610,520 | 2,414,610 |
| Inventory turnover | 2.72 | 2.66 | 2.75 | 2.97 | 2.91 |
December 31, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $8,744,000K ÷ $3,220,000K
= 2.72
Inventory turnover measures how efficiently a company manages its inventory by assessing how many times a company sells and replaces its inventory within a specific period. For LKQ Corporation, the inventory turnover has shown a fluctuating trend over the past five years. In 2020, the ratio was 2.91, indicating that inventory turned over approximately 2.91 times during that year. It increased slightly to 2.97 in 2021, suggesting a slight improvement in inventory management efficiency.
However, in 2022, the inventory turnover ratio decreased to 2.75, and further dropped to 2.66 in 2023. These declines may indicate potential issues such as overstocking, slowing sales, or difficulty in managing inventory levels effectively. Despite these declines, the inventory turnover ratio picked up slightly to 2.72 in 2024, showing a slight improvement in inventory management efficiency compared to the previous year.
Overall, while there have been fluctuations in the inventory turnover ratio for LKQ Corporation, the company should continue to monitor and optimize its inventory management practices to ensure efficient use of resources and maintain healthy turnover levels.