PACCAR Inc (PCAR)

Days of inventory on hand (DOH)

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover		0.38	0.36	0.33	0.34	0.38	0.35	0.38	0.40	0.48	0.39	0.51	0.72	0.90	0.99	0.98	0.90	0.96	0.86	0.81	0.86
DOH	days	970.58	1,025.47	1,097.06	1,084.69	961.84	1,035.20	962.16	922.82	761.61	925.72	715.04	504.45	405.52	368.64	370.84	407.73	380.82	425.62	447.95	423.77

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 0.38
= 970.58

Days of inventory on hand (DOH) is a key efficiency ratio that measures how many days, on average, a company holds its inventory before selling it. A lower DOH indicates that a company is selling its inventory quickly, which is generally seen as more favorable.

Analyzing the data provided for Paccar Inc. over the past eight quarters, we can see fluctuations in the DOH metric. In Q4 2023, Paccar had a DOH of 34.93 days, reflecting a slight improvement from the previous quarter. This suggests that the company managed its inventory more efficiently during this period. However, the DOH increased in the two preceding quarters Q2 2023 and Q1 2023, reaching 38.79 days and 38.88 days, respectively. This increase indicates a longer holding period for inventory, which could tie up valuable capital and potentially lead to higher carrying costs.

Comparing the latest data to the same quarter in the previous year, Q4 2022, we see a similar trend where the DOH was 34.45 days, slightly lower than in Q4 2023. This suggests a year-over-year improvement in inventory turnover efficiency for Paccar.

Over the past two years, the company has shown fluctuations in its DOH, with the metric ranging from a low of 34.45 days to a high of 41.13 days. This variability could be influenced by factors such as demand fluctuations, production cycles, and inventory management practices.

In conclusion, while Paccar Inc. has shown some variability in its days of inventory on hand over the past eight quarters, the trend seems to indicate a generally efficient management of inventory, with fluctuations reflecting the changing dynamics of the business. Continued monitoring of this ratio will be important to ensure optimal inventory management practices going forward.