Powell Industries Inc (POWL)
Inventory turnover
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 824,156 | 630,568 | 518,395 | 462,913 | 493,163 |
| Inventory | US$ in thousands | 85,873 | 63,865 | 50,415 | 29,835 | 28,968 |
| Inventory turnover | 9.60 | 9.87 | 10.28 | 15.52 | 17.02 |
September 30, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $824,156K ÷ $85,873K
= 9.60
Powell Industries Inc's inventory turnover has exhibited a decreasing trend over the past five years. The inventory turnover ratio measures how efficiently a company manages its inventory by indicating the number of times it sells and replaces its inventory during a given period. A higher inventory turnover ratio is generally preferred as it signifies that the company is selling goods more quickly and efficiently.
In 2020, Powell Industries had an inventory turnover ratio of 17.02, which decreased to 15.52 in 2021 and further decreased to 10.28 in 2022. This downward trend indicates a potential inefficiency in managing inventory levels, as the company is taking longer to sell and replace its inventory.
The inventory turnover ratios of 9.87 in 2023 and 9.60 in 2024 suggest a continued decline in the efficiency of inventory management. This may be a cause for concern as lower inventory turnover ratios could indicate overstocking, obsolete inventory, or slower sales.
Overall, Powell Industries Inc may need to review its inventory management practices to improve efficiency and streamline its operations to enhance profitability and optimize working capital utilization.
Peer comparison
Sep 30, 2024