Merck & Company Inc (MRK)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 29,523,000 | 31,360,000 | 25,611,000 | 29,810,000 | 27,860,000 |
| Inventory | US$ in thousands | 6,358,000 | 5,911,000 | 5,953,000 | 5,554,000 | 5,978,000 |
| Inventory turnover | 4.64 | 5.31 | 4.30 | 5.37 | 4.66 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $29,523,000K ÷ $6,358,000K
= 4.64
Inventory turnover measures how effectively a company is managing its inventory levels by indicating how many times the inventory is sold and replaced over a certain period. In the case of Merck & Co Inc, the trend in inventory turnover over the past five years shows some fluctuations.
In 2023, the inventory turnover ratio decreased to 2.54 from 2.95 in 2022, indicating that the company took longer to sell and replace its inventory compared to the previous year. This could signal potential issues such as excess inventory levels, slow sales, or challenges in managing supply chain operations efficiently.
However, it is worth noting that the 2023 inventory turnover of 2.54 is still relatively close to the figures of 2.29, 2.45, and 2.36 in 2021, 2020, and 2019 respectively. This suggests that while there was a decline in inventory turnover in 2023, the company's performance in managing inventory levels was relatively consistent over the past few years.
Further analysis would be needed to understand the specific drivers behind the changes in inventory turnover, such as changes in sales volume, inventory management practices, or market demand. Overall, monitoring inventory turnover is crucial for assessing the efficiency of Merck & Co Inc's operations and potential implications for its financial performance.
Peer comparison
Dec 31, 2023