Microsoft Corporation (MSFT)

Inventory turnover

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Cost of revenue	US$ in thousands	74,114,000	65,863,000	62,650,000	52,232,000	46,078,000
Inventory	US$ in thousands	1,246,000	2,500,000	3,742,000	2,636,000	1,895,000
Inventory turnover		59.48	26.35	16.74	19.81	24.32

June 30, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $74,114,000K ÷ $1,246,000K
= 59.48

Inventory turnover is a crucial financial ratio that measures how efficiently a company is managing its inventory. It indicates the number of times a company sells and replaces its inventory during a specific period.

Analyzing the inventory turnover of Microsoft Corporation over the years reveals a downward trend from 2020 to 2022, indicating a decreasing rate of inventory turnover. In June 2020, the inventory turnover stood at 24.32 times, but by June 2022, it had decreased to 16.74 times. A lower inventory turnover ratio may suggest overstocking, obsolete inventory, or inefficient inventory management during this period.

However, there was a significant improvement in inventory turnover in June 2023, reaching 26.35 times, which indicates that Microsoft managed its inventory more efficiently, possibly through better demand forecasting or inventory control measures.

The most notable change occurred in June 2024, with an inventory turnover ratio of 59.48 times, indicating a substantial increase in the rate at which Microsoft was turning over its inventory. This sharp spike could suggest more effective inventory management practices, streamlined operations, or a shift in sales strategies.

In conclusion, while Microsoft experienced fluctuations in inventory turnover over the years, the significant improvement in June 2023 and the remarkable increase in June 2024 reflect efforts to enhance inventory efficiency and overall operational effectiveness. Periodic monitoring and analysis of inventory turnover ratios are essential for assessing inventory management performance and identifying areas for potential optimization within the company.