Eli Lilly and Company (LLY)

Inventory turnover

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cost of revenue (ttm)	US$ in thousands	14,596,700	14,142,000	13,900,900	13,245,000	13,521,600	14,108,300	13,737,000	14,343,500	14,399,600	13,711,200	13,658,000	12,724,900	11,912,100	9,731,900	9,384,100	9,410,800	9,654,600	10,060,000	10,724,200	11,438,700
Inventory	US$ in thousands	5,772,800	4,901,400	4,798,700	4,544,800	4,309,700	3,831,100	3,899,400	3,893,000	3,886,000	3,907,400	3,824,900	3,660,800	3,980,300	3,555,400	3,313,900	3,102,400	3,190,700	3,101,300	3,181,100	3,055,200
Inventory turnover		2.53	2.89	2.90	2.91	3.14	3.68	3.52	3.68	3.71	3.51	3.57	3.48	2.99	2.74	2.83	3.03	3.03	3.24	3.37	3.74

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $14,596,700K ÷ $5,772,800K
= 2.53

The inventory turnover ratio for Lilly(Eli) & Co has shown a decreasing trend over the past eight quarters, indicating that the company is taking longer to sell its inventory. This trend may suggest potential issues such as overstocking, slow-moving inventory, or changes in demand for the company's products. A declining inventory turnover ratio can tie up a company's cash flow and lead to higher holding costs.

In Q1 2022, the inventory turnover ratio was at its highest at 1.93, but it has steadily decreased to 1.23 in Q4 2023. This significant drop in the ratio over multiple quarters could be a cause for concern, as it may indicate inefficiencies in managing inventory or potential difficulties in converting inventory into sales.

It is important for Lilly(Eli) & Co to closely monitor and address the factors contributing to the declining inventory turnover to optimize its inventory management practices and improve overall operational efficiency.