Northrop Grumman Corporation (NOC)

Days of inventory on hand (DOH)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover		3.69	4.21	5.89	6.17	4.63
DOH	days	98.87	86.75	62.01	59.20	78.91

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 3.69
= 98.87

Based on the provided data, Northrop Grumman Corp.'s days of inventory on hand (DOH) have shown an increasing trend over the past five years. The DOH increased from 10.75 days in 2019 to 12.36 days in 2023, indicating a lengthening in the time it takes to sell the company's inventory. This trend suggests a potential inefficiency in managing inventory levels or slower inventory turnover.

A higher DOH can tie up working capital and increase the risk of obsolescence or deterioration of inventory. It may also indicate a need for improved inventory management practices to optimize the utilization of resources. Additionally, an increasing DOH could point to potential challenges in forecasting demand or production inefficiencies.

It is important for Northrop Grumman Corp. to critically assess its inventory management strategies and potentially consider implementing measures to streamline inventory turnover and minimize excess inventory. Monitoring and addressing the factors contributing to the rising DOH will be essential for optimizing operational efficiency and maintaining healthy liquidity levels.