Packaging Corp of America (PKG)
Inventory turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 6,600,200 | 6,103,500 | 6,387,400 | 5,857,300 | 5,288,800 |
| Inventory | US$ in thousands | 1,124,900 | 1,013,100 | 977,300 | 902,500 | 787,900 |
| Inventory turnover | 5.87 | 6.02 | 6.54 | 6.49 | 6.71 |
December 31, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $6,600,200K ÷ $1,124,900K
= 5.87
Packaging Corp of America's inventory turnover has shown a relatively stable trend over the five-year period from December 31, 2020, to December 31, 2024. The company's inventory turnover ratio decreased from 6.71 in 2020 to 5.87 in 2024. This indicates a slight decrease in the efficiency of the company in managing its inventory.
A higher inventory turnover ratio generally signifies that a company is selling its inventory more quickly, which is considered favorable as it reduces the risk of inventory obsolescence and holding costs. Conversely, a lower inventory turnover ratio may suggest that the company is not selling its inventory as quickly, potentially leading to excess inventory or storage costs.
Although Packaging Corp of America's inventory turnover ratio has slightly declined over the years, it is still within a reasonable range, indicating that the company is efficiently managing its inventory levels. It is important for the company to monitor its inventory turnover ratio to ensure that it remains at an optimal level to support operational efficiency and profitability.
Peer comparison
Dec 31, 2024