Microsoft Corporation (MSFT)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Mar 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	120,008,000	111,595,000	108,164,000	104,168,000	102,007,000	100,826,000	99,955,000	98,955,000	95,995,000	93,342,000	90,084,000	86,673,000	83,147,000	79,943,000	78,079,000	75,659,000	73,738,000	73,160,000	70,198,000	68,893,000
Inventory	US$ in thousands	909,000	1,626,000	1,304,000	1,615,000	3,000,000	2,500,000	2,877,000	2,980,000	4,268,000	3,742,000	3,296,000	3,019,000	3,411,000	2,636,000	2,245,000	1,924,000	2,705,000	1,895,000	1,644,000	1,823,000
Inventory turnover		132.02	68.63	82.95	64.50	34.00	40.33	34.74	33.21	22.49	24.94	27.33	28.71	24.38	30.33	34.78	39.32	27.26	38.61	42.70	37.79

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $120,008,000K ÷ $909,000K
= 132.02

Inventory turnover ratio is a key metric that measures how efficiently a company manages its inventory by assessing how many times the company sells and replaces its average inventory over a specific period. For Microsoft Corporation, the inventory turnover ratio has shown some fluctuations over the analyzed period.

The inventory turnover for Microsoft started at 37.79 at the end of December 2019 and showed an increasing trend, reaching a peak of 82.95 by the end of March 2024. This upward trend indicates that Microsoft was selling and replacing its inventory at a faster pace during this period.

However, after the peak in March 2024, there was a significant drop in inventory turnover to 68.63 by the end of September 2024, followed by a steep increase to 132.02 by the end of December 2024. Such fluctuations may be attributed to various factors such as changes in demand, production issues, or strategic inventory management decisions.

Investors and analysts closely monitor inventory turnover ratios to assess a company's operational efficiency and inventory management practices. A high inventory turnover ratio generally indicates effective inventory management, while a low ratio may suggest overstocking, obsolete inventory, or slowing sales.

It is essential for Microsoft to continue monitoring and optimizing its inventory turnover to ensure efficient utilization of resources and maintain a healthy balance between inventory levels and sales volumes.