Patrick Industries Inc (PATK)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	3,063,920	4,222,680	3,586,770	2,216,970	2,085,280
Inventory	US$ in thousands	510,133	667,841	614,356	312,809	253,870
Inventory turnover		6.01	6.32	5.84	7.09	8.21

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $3,063,920K ÷ $510,133K
= 6.01

From 2019 to 2023, Patrick Industries, Inc.'s inventory turnover has shown a declining trend. The inventory turnover ratio indicates the number of times a company sells and replaces its inventory within a specific time period. A high inventory turnover ratio is generally preferred as it signifies that inventory is efficiently managed and sold quickly.

In 2019, the company had an inventory turnover ratio of 7.54, which gradually decreased to 5.26 in 2023. This decline may be indicative of various factors such as slowing sales, changes in production levels, or inefficiencies in inventory management. A lower inventory turnover ratio may suggest excess inventory levels, potential obsolescence, or difficulties in selling products.

Analyzing the inventory turnover ratio over a multi-year period can provide insights into the company's inventory management practices and operational efficiency. It is essential for Patrick Industries, Inc. to evaluate the reasons behind the decreasing trend in inventory turnover and take appropriate measures to improve inventory management to optimize its operations and financial performance.