Perrigo Company PLC (PRGO)

Inventory turnover

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cost of revenue (ttm) US$ in thousands 2,830,400 2,807,600 2,837,100 2,931,500 2,975,200 3,018,300 3,043,000 3,027,500 2,996,300 2,966,100 2,935,100 2,817,600 2,722,500 2,800,300 2,879,600 3,031,900 3,248,100 3,269,800 3,262,500 3,196,300
Inventory US$ in thousands 1,081,800 1,133,800 1,116,200 1,121,300 1,140,900 1,149,500 1,167,500 1,183,000 1,150,300 1,085,200 1,079,600 1,022,400 1,020,200 1,092,500 1,115,900 1,136,100 1,200,200 1,100,700 1,034,700 930,800
Inventory turnover 2.62 2.48 2.54 2.61 2.61 2.63 2.61 2.56 2.60 2.73 2.72 2.76 2.67 2.56 2.58 2.67 2.71 2.97 3.15 3.43

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $2,830,400K ÷ $1,081,800K
= 2.62

The inventory turnover for Perrigo Company PLC has shown a gradual decline over the past few years, indicating a slowing down in the rate at which the company is selling its inventory. From March 31, 2020, where the inventory turnover was 3.43, the ratio has decreased to 2.48 as of September 30, 2024. This downward trend suggests that the company may be experiencing challenges in efficiently managing its inventory levels or facing difficulties in converting inventory into sales.

A lower inventory turnover ratio could imply a build-up of excess inventory, leading to storage costs and potential obsolescence risks. It may also signal inefficiencies in production or distribution processes, as products are not being sold as quickly as they are being produced or acquired.

Perrigo may need to reassess its inventory management strategies to improve efficiency and liquidity. This could involve optimizing procurement practices, enhancing demand forecasting, streamlining production processes, or implementing more effective inventory control measures to enhance inventory turnover and overall operational performance.