Microsoft Corporation (MSFT)

Inventory turnover

		Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Cost of revenue	US$ in thousands	100,049,000	93,355,000	79,977,000	73,159,000	67,908,000
Inventory	US$ in thousands	2,500,000	3,742,000	2,636,000	1,895,000	2,063,000
Inventory turnover		40.02	24.95	30.34	38.61	32.92

June 30, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $100,049,000K ÷ $2,500,000K
= 40.02

The inventory turnover ratio measures how efficiently a company manages its inventory by indicating the number of times inventory is sold and replaced within a specific period. A higher turnover ratio generally indicates efficient inventory management.

Microsoft Corporation's inventory turnover has fluctuated over the past five years, with significant changes observed.

In June 2023, the inventory turnover ratio increased to 26.35, representing a substantial improvement from the previous year. This may be indicative of more effective inventory management, possibly through streamlined supply chain processes or improved demand forecasting.

In contrast, the ratio declined to 16.74 in June 2022, signaling a decrease in the rate at which inventory was sold and replaced compared to the previous year. This decline may raise concerns about inventory management efficiency, potentially leading to increased carrying costs or the risk of obsolete inventory.

In June 2021, the inventory turnover ratio was 19.81, reflecting a moderate increase from the preceding year. This improvement suggests better control over inventory levels and sales, leading to a more productive use of resources.

June 2020 saw a ratio of 24.32, indicating a higher turnover compared to the previous year. This may reflect effective inventory management strategies and a proactive approach to aligning inventory levels with demand.

In June 2019, the inventory turnover was 20.80, showing a moderate decrease from the previous year. This change may suggest a slightly less efficient use of inventory resources compared to the prior period.

Overall, the fluctuation in Microsoft's inventory turnover ratio indicates varying effectiveness in managing inventory across different periods. It is important for investors and stakeholders to closely monitor future changes in this ratio, as it can provide insights into the company's operational efficiency and potential impact on financial performance.