LKQ Corporation (LKQ)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 8,291,000 | 7,571,000 | 7,767,000 | 7,036,000 | 7,654,320 |
| Inventory | US$ in thousands | 3,121,000 | 2,752,000 | 2,611,000 | 2,414,610 | 2,772,780 |
| Inventory turnover | 2.66 | 2.75 | 2.97 | 2.91 | 2.76 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $8,291,000K ÷ $3,121,000K
= 2.66
Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory. It indicates the number of times a company sells and replaces its inventory during a specific period.
In the case of LKQ Corp, the inventory turnover ratio has shown a fluctuating trend over the past five years. In 2023, the inventory turnover ratio was 2.66, slightly lower than the previous year's ratio of 2.75. This indicates that LKQ Corp turned over its inventory approximately 2.66 times during the year.
While a higher inventory turnover ratio is generally preferred as it suggests efficient inventory management, a lower ratio may indicate issues such as overstocking or slow-moving inventory. It is important for LKQ Corp to monitor its inventory turnover ratio closely and take steps to optimize its inventory management practices.
Overall, the trend in LKQ Corp's inventory turnover ratio suggests that there may be room for improvement in managing inventory levels and sales processes to enhance efficiency and profitability.