Penske Automotive Group Inc (PAG)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	28,034,900	26,199,700	24,076,800	19,625,100	19,713,700
Inventory	US$ in thousands	4,293,100	3,509,100	3,129,000	3,425,600	4,260,700
Inventory turnover		6.53	7.47	7.69	5.73	4.63

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $28,034,900K ÷ $4,293,100K
= 6.53

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory for a specific period. In the case of Penske Automotive Group Inc, the inventory turnover has fluctuated over the past five years.

In 2023, the inventory turnover was 5.73 times, a slight decrease from the previous year's turnover of 6.55 times. This indicates that the company took approximately 5.73 times to sell and replace its inventory during the year. The downward trend in inventory turnover may suggest a potential decrease in sales volume relative to the level of inventory held by the company.

Comparing the 2023 inventory turnover of 5.73 times to 2021 and 2022, where the ratios were 6.75 and 6.55 times respectively, it can be observed that the company is now taking longer to sell its inventory. This slowdown in inventory turnover could imply inefficiencies in inventory management or challenges in selling existing inventory.

Furthermore, when comparing the 2023 inventory turnover to 2020 and 2019, where the ratios were 5.04 and 4.63 times respectively, there is a positive trend in the company's inventory turnover efficiency. This improvement signifies that Penske Automotive Group Inc has been able to optimize its inventory management and sales processes over the years.

Overall, while the 2023 inventory turnover for Penske Automotive Group Inc decreased compared to the previous year, it is important for the company to continuously monitor and improve its inventory management practices to enhance operational efficiency and profitability.