Ormat Technologies Inc (ORA)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	888,752	782,527	678,795	429,067	476,721
Inventory	US$ in thousands	45,037	22,832	28,445	35,321	34,949
Inventory turnover		19.73	34.27	23.86	12.15	13.64

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $888,752K ÷ $45,037K
= 19.73

Ormat Technologies Inc's inventory turnover ratio has fluctuated over the past five years. In 2023, the inventory turnover ratio was 12.55, indicating that the company sold and replaced its inventory approximately 12.55 times during the year. This represents a decrease from the previous year's ratio of 20.38.

The significant drop in the inventory turnover ratio from 2022 to 2023 suggests that Ormat Technologies Inc may have experienced slower sales relative to the amount of inventory held. It could indicate inefficiencies in managing inventory levels or challenges in matching supply with demand.

Comparing the 2023 ratio to earlier years, it is closer to the ratios seen in 2020 and 2019, but still lower than the 2021 ratio. This variation could be due to changes in the company's sales strategies, production efficiency, market demand, or inventory management practices.

Overall, a lower inventory turnover ratio can imply excess inventory levels, which may tie up capital and lead to higher storage costs or potential obsolescence risks. Ormat Technologies Inc may benefit from a closer examination of its inventory management processes to optimize its operations and improve cash flow efficiency.