Organon & Co (OGN)
Inventory turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 2,688,000 | 2,515,000 | 2,294,000 | 2,382,000 | 3,347,000 |
| Inventory | US$ in thousands | 1,321,000 | 1,315,000 | 1,003,000 | 915,000 | 913,000 |
| Inventory turnover | 2.03 | 1.91 | 2.29 | 2.60 | 3.67 |
December 31, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $2,688,000K ÷ $1,321,000K
= 2.03
Organon & Co's inventory turnover ratio indicates the number of times the company sells and replaces its inventory during a specific period. A decreasing trend is observed in the inventory turnover ratio from 3.67 on December 31, 2020, to 2.03 on December 31, 2024.
The decline in the inventory turnover ratio suggests that Organon & Co is taking longer to sell its inventory, which could potentially lead to excess inventory levels or slower sales. This may result in increased holding costs, potential obsolescence risks, and tie-up of capital in inventory.
It is essential for the company to closely monitor its inventory management practices, including demand forecasting, procurement, and production planning, to optimize inventory turnover and maintain efficient operations. Organon & Co may need to implement strategies to address the decreasing trend in inventory turnover and ensure adequate inventory levels that align with sales demand to avoid adverse financial implications in the future.
Peer comparison
Dec 31, 2024