Northrop Grumman Corporation (NOC)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 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
Cost of revenue (ttm)	US$ in thousands	4,049,000	4,107,000	4,146,000	4,118,000	4,094,000	4,296,000	4,245,000	4,177,000	4,115,000	4,941,000	4,858,000	4,852,000	4,774,000	4,993,000	4,957,000	4,790,000	4,680,000	3,777,000	3,698,000	3,650,000
Inventory	US$ in thousands	1,455,000	1,646,000	1,504,000	1,370,000	1,109,000	1,355,000	1,287,000	1,115,000	978,000	989,000	909,000	838,000	811,000	872,000	863,000	860,000	759,000	853,000	832,000	785,000
Inventory turnover		2.78	2.50	2.76	3.01	3.69	3.17	3.30	3.75	4.21	5.00	5.34	5.79	5.89	5.73	5.74	5.57	6.17	4.43	4.44	4.65

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $4,049,000K ÷ $1,455,000K
= 2.78

Northrop Grumman Corporation's inventory turnover ratio has shown fluctuations over the years, indicating variations in the efficiency of managing its inventory. The ratio decreased from 4.65 in March 2020 to a low of 2.50 in September 2024, before recovering slightly to 2.78 by December 2024.

A decreasing inventory turnover ratio may suggest issues such as overstocking, obsolete inventory, or slow-moving inventory, which could tie up capital and impact profitability. Conversely, a higher ratio indicates a faster inventory turnover, implying efficient inventory management and potentially lower holding costs.

It is essential for Northrop Grumman to closely monitor its inventory turnover ratio to ensure optimal inventory management, balance between carrying costs and stock-outs, and overall operational efficiency. Identifying and addressing the root causes of fluctuations in the ratio can help the company improve its working capital management and enhance its financial performance.