MACOM Technology Solutions Holdings Inc (MTSI)

Inventory turnover

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Cost of revenue	US$ in thousands	335,805	262,610	268,989	265,065	259,871
Inventory	US$ in thousands	194,490	136,300	114,960	82,699	91,584
Inventory turnover		1.73	1.93	2.34	3.21	2.84

September 30, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $335,805K ÷ $194,490K
= 1.73

The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times the company sells and replaces its inventory during a specific period. A higher inventory turnover ratio generally indicates that a company is selling its products more quickly.

Looking at MACOM Technology Solutions Holdings Inc's inventory turnover over the past five years, we observe a declining trend. In September 2020, the inventory turnover ratio was 2.84, which means the company turned over its inventory approximately 2.84 times during that year. However, this ratio decreased to 1.73 in September 2024.

A decreasing inventory turnover ratio can suggest potential issues such as overstocking, slow-moving inventory, or inefficiencies in the supply chain. This could tie up financial resources in inventory, leading to increased storage costs and possible obsolescence risks.

It is important for MACOM Technology Solutions Holdings Inc to closely monitor its inventory turnover ratio to ensure optimal inventory management and efficient use of resources. Identifying and addressing the factors contributing to the decline in inventory turnover will be crucial for improving operational efficiency and profitability.