Microsoft Corporation (MSFT)

Inventory turnover

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cost of revenue (ttm)	US$ in thousands	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	68,580,000	67,925,000	84,891,000
Inventory	US$ in thousands	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	2,622,000	2,063,000	1,951,000
Inventory turnover		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	26.16	32.93	43.51

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $104,168,000K ÷ $1,615,000K
= 64.50

The inventory turnover ratio measures how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory for a specific period. A higher inventory turnover ratio generally indicates that the company is selling its inventory more quickly.

Analyzing Microsoft Corporation's inventory turnover ratio over the past eight quarters, we observe a fluctuating trend. The ratio has experienced an upward trajectory, reaching a peak of 42.63 in the most recent quarter, Dec 31, 2023. This sharp increase indicates that Microsoft has been able to sell its inventory at a much faster rate compared to the previous quarters.

The significant improvement in the inventory turnover ratio can be attributed to various factors such as efficient inventory management, effective demand forecasting, and streamlined production processes. A higher inventory turnover ratio suggests that Microsoft is effectively managing its inventory levels, reducing the risk of obsolete inventory and ensuring a quicker conversion of inventory into sales.

The consistent improvement in the inventory turnover ratio reflects positively on the company's operational efficiency and supply chain management. However, it's important to monitor this ratio in conjunction with other financial metrics to gain a comprehensive understanding of Microsoft's overall performance and prospects for future growth.