McCormick & Company Incorporated (MKC)
Inventory turnover
| Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost of revenue (ttm) | US$ in thousands | 4,132,700 | 4,108,400 | 4,140,400 | 4,160,500 | 4,159,700 | 4,179,500 | 4,146,500 | 4,116,600 | 4,076,000 | 4,032,100 | 3,953,000 | 3,881,300 | 3,823,300 | 3,693,100 | 3,583,300 | 3,462,800 | 3,300,900 | 3,258,500 | 3,207,800 | 3,179,600 |
| Inventory | US$ in thousands | 1,239,900 | 1,242,600 | 1,158,200 | 1,129,600 | 1,126,500 | 1,225,500 | 1,276,200 | 1,344,600 | 1,340,100 | 1,379,500 | 1,344,600 | 1,244,200 | 1,182,300 | 1,202,400 | 1,147,800 | 1,073,400 | 1,032,600 | 942,100 | 831,300 | 835,600 |
| Inventory turnover | 3.33 | 3.31 | 3.57 | 3.68 | 3.69 | 3.41 | 3.25 | 3.06 | 3.04 | 2.92 | 2.94 | 3.12 | 3.23 | 3.07 | 3.12 | 3.23 | 3.20 | 3.46 | 3.86 | 3.81 |
November 30, 2024 calculation
Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $4,132,700K ÷ $1,239,900K
= 3.33
Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory by calculating the number of times inventory is sold and replaced during a specific period. For McCormick & Company Incorporated, the inventory turnover ratio has displayed some fluctuations over the past few years based on the provided data.
From February 29, 2020, to November 30, 2024, we observe that the inventory turnover ratio ranged from a low of 2.92 to a high of 3.86. The trend shows that the ratio generally decreased from 3.81 in February 2020 to 2.92 in August 31, 2022, before slightly increasing again. This indicates that in recent years, McCormick & Company has taken longer to sell and replace its inventory.
A high inventory turnover ratio is usually preferred as it suggests that a company is effectively managing its inventory levels, minimizing holding costs, and quickly converting inventory into sales. Conversely, a lower inventory turnover ratio may imply excess inventory, slow-moving products, or inefficient inventory management.
It is essential for McCormick & Company to closely monitor its inventory turnover ratio to ensure optimal inventory management, balance between supply and demand, and efficient utilization of resources to achieve profitability and maintain competitiveness in the market.