Phibro Animal Health Corporation (PAHC)

Inventory turnover

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Cost of revenue	US$ in thousands	985,065	915,738	872,199	561,973	543,472
Inventory	US$ in thousands	265,911	277,570	259,158	216,312	196,659
Inventory turnover		3.70	3.30	3.37	2.60	2.76

June 30, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $985,065K ÷ $265,911K
= 3.70

Phibro Animal Health Corporation's inventory turnover has shown a fluctuating trend over the past five years. The inventory turnover ratio increased from 2.76 in June 2020 to 3.70 in June 2024, indicating an improvement in the efficiency of managing inventory. This implies that the company is selling and replenishing its inventory at a faster rate.

A higher inventory turnover ratio is generally preferable as it suggests that the company is efficiently managing its stock levels and not tying up excess capital in inventory. It indicates effective inventory management, potentially leading to lower storage costs and reduced risk of obsolescence.

However, it is essential to note that an extremely high inventory turnover ratio could also indicate stock-outs or lost sales due to inadequate inventory levels. Therefore, Phibro Animal Health Corporation should continue to monitor its inventory turnover ratio and ensure a balance between maintaining optimal inventory levels and maximizing sales.