Perrigo Company PLC (PRGO)

Inventory turnover

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cost of revenue US$ in thousands 2,830,700 2,975,200 2,996,200 2,722,500 3,248,100
Inventory US$ in thousands 1,081,800 1,140,900 1,150,300 1,020,200 1,200,200
Inventory turnover 2.62 2.61 2.60 2.67 2.71

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $2,830,700K ÷ $1,081,800K
= 2.62

Based on the provided data for Perrigo Company PLC, the inventory turnover ratio has been relatively stable over the five-year period from December 31, 2020, to December 31, 2024. The inventory turnover ratio decreased slightly from 2.71 in 2020 to 2.67 in 2021, and continued to decline gradually to 2.60 in 2022. However, there was a slight uptick to 2.61 in 2023 and further to 2.62 in 2024.

A lower inventory turnover ratio indicates that the company is holding its inventory for a longer period before selling it. This could suggest inefficiencies in inventory management, excess or obsolete inventory, or difficulties in selling products. On the other hand, a higher ratio generally signifies effective inventory management and a faster turnover of inventory, which can lead to better liquidity and profitability.

In Perrigo's case, the slight downward trend in the inventory turnover ratio over the years may raise concerns about the company's inventory management efficiency. It would be important for Perrigo to closely monitor and analyze its inventory levels, sales trends, and procurement processes to optimize inventory turnover and ensure healthy financial performance in the future.