Plexus Corp (PLXS)

Inventory turnover

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Cost of revenue	US$ in thousands	3,803,760	4,021,390	3,639,640	3,198,890	3,244,450
Inventory	US$ in thousands	1,311,430	1,562,040	1,602,780	972,312	763,461
Inventory turnover		2.90	2.57	2.27	3.29	4.25

September 30, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $3,803,760K ÷ $1,311,430K
= 2.90

Inventory turnover is a crucial financial ratio that measures how efficiently a company manages its inventory. Plexus Corp's inventory turnover has fluctuated over the past five years. In 2024, the inventory turnover ratio was 2.90, indicating that the company sold and replaced its inventory approximately 2.90 times during the year. This represents an improvement compared to the previous year, where the ratio was 2.57.

The trend over the five years shows some variability. In 2021, the inventory turnover was relatively high at 3.29, suggesting that Plexus Corp was managing its inventory more effectively that year. However, this ratio has been on a decline since then, with the lowest turnover of 2.27 observed in 2022.

A lower inventory turnover ratio could imply excess inventory levels or slow-moving stock, which may tie up company funds and lead to potential obsolescence risks. Conversely, a higher inventory turnover ratio indicates efficient inventory management and quicker sales cycles.

Plexus Corp should monitor its inventory turnover ratio closely to ensure optimal inventory levels, minimize holding costs, and enhance overall operational efficiency. Further analysis into the factors driving the fluctuations in the inventory turnover ratio would be beneficial for the company to improve its inventory management practices.