NewJersey Resources Corporation (NJR)

Inventory turnover

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cost of revenue	US$ in thousands	17,021	16,815	102,814	11,593	20,986
Inventory	US$ in thousands	226,523	293,968	213,167	187,910	184,278
Inventory turnover		0.08	0.06	0.48	0.06	0.11

September 30, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $17,021K ÷ $226,523K
= 0.08

The inventory turnover ratio of New Jersey Resources Corporation has exhibited a declining trend over the past five years. In 2019, the ratio stood at 11.05, indicating that the company's inventory was sold and replaced more than eleven times during the year. However, this ratio has been steadily decreasing, reaching 6.91 in 2020, 6.31 in 2021, and further declining to 6.60 in 2022 and 4.29 in 2023.

This declining trend suggests that the company may be carrying more inventory relative to its sales volume in recent years. A lower inventory turnover ratio indicates that the company is taking longer to sell its inventory or that it may be overstocked. This can tie up working capital and lead to higher storage and carrying costs.

Therefore, it may be important for New Jersey Resources Corporation to effectively manage its inventory levels to optimize its turnover and ensure that it aligns closely with sales demand, in order to minimize carrying costs and improve working capital efficiency.