Powell Industries Inc (POWL)
Inventory turnover
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 630,568 | 518,395 | 462,913 | 493,163 | 500,365 |
| Inventory | US$ in thousands | 63,865 | 50,415 | 29,835 | 28,968 | 29,202 |
| Inventory turnover | 9.87 | 10.28 | 15.52 | 17.02 | 17.13 |
September 30, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $630,568K ÷ $63,865K
= 9.87
The inventory turnover for Powell Industries, Inc. has shown a declining trend over the past five years. In 2023, the inventory turnover was 8.6, down from 8.88 in 2022 and significantly lower than the 13.26, 14.63, and 14.73 recorded in 2021, 2020, and 2019, respectively. This indicates that the company's efficiency in managing its inventory has weakened over the years.
A declining inventory turnover ratio may suggest potential issues such as overstocking, slow-moving inventory, or inefficiencies in the supply chain management. It could also indicate ineffective sales and operations planning, leading to excess inventory levels and potential risk of obsolescence.
Management should focus on optimizing inventory levels, implementing effective inventory management processes, and improving demand forecasting to address the declining trend in inventory turnover. This will help the company to reduce carrying costs, minimize the risk of inventory obsolescence, and improve overall working capital efficiency.
Peer comparison
Sep 30, 2023