LKQ Corporation (LKQ)
Inventory turnover
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost of revenue (ttm) | US$ in thousands | 8,906,000 | 8,976,000 | 8,963,000 | 8,646,000 | 8,291,000 | 7,967,000 | 7,617,000 | 7,557,000 | 7,571,000 | 7,709,370 | 7,834,590 | 7,879,990 | 7,766,060 | 7,633,730 | 7,529,650 | 7,125,570 | 7,035,560 | 7,065,370 | 7,163,670 | 7,549,340 |
| Inventory | US$ in thousands | 3,220,000 | 3,132,000 | 3,064,000 | 3,123,000 | 3,121,000 | 2,998,000 | 2,681,000 | 2,733,000 | 2,752,000 | 2,635,000 | 2,650,000 | 2,573,000 | 2,610,520 | 2,423,850 | 2,394,150 | 2,392,710 | 2,414,610 | 2,245,850 | 2,288,290 | 2,718,630 |
| Inventory turnover | 2.77 | 2.87 | 2.93 | 2.77 | 2.66 | 2.66 | 2.84 | 2.77 | 2.75 | 2.93 | 2.96 | 3.06 | 2.97 | 3.15 | 3.15 | 2.98 | 2.91 | 3.15 | 3.13 | 2.78 |
December 31, 2024 calculation
Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $8,906,000K ÷ $3,220,000K
= 2.77
Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory. It indicates how many times during a specific period (typically a year) the company's inventory is sold and replaced. For LKQ Corporation, the inventory turnover has fluctuated over time as follows:
- The inventory turnover ratio ranged between 2.75 to 3.15 over the period from March 31, 2020, to December 31, 2024.
- The highest inventory turnover ratio was observed in September 30, 2021, June 30, 2021, and September 30, 2021, all at 3.15.
- The lowest inventory turnover ratios were recorded on December 31, 2022, and December 31, 2023, both at 2.66.
A higher inventory turnover ratio is generally preferable as it suggests that the company is selling its inventory quickly and efficiently. This can indicate good sales and inventory management practices. Conversely, a lower inventory turnover ratio may indicate slower inventory sales, potential inventory obsolescence, or overstocking.
LKQ Corporation's inventory turnover has shown some variability, which could be due to factors such as seasonal fluctuations in sales, changes in customer demand, or inefficiencies in inventory management. It would be important for the company to analyze the reasons behind these fluctuations and take appropriate actions to optimize their inventory turnover for improved operational efficiency and profitability.