RPC Inc (RES)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	1,381,880	1,322,630	859,520	911,466	1,278,200
Inventory	US$ in thousands	110,904	97,107	78,983	82,918	100,947
Inventory turnover		12.46	13.62	10.88	10.99	12.66

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $1,381,880K ÷ $110,904K
= 12.46

Inventory turnover is a financial ratio that measures how efficiently a company manages its inventory by analyzing how many times it sells and replaces its inventory over a given period. Looking at the data provided for RPC, Inc. over the past five years, we can see fluctuations in the inventory turnover ratio.

In 2023, the inventory turnover ratio was 9.82, indicating that RPC, Inc. turned over its inventory approximately 9.82 times during the year. This signifies a decrease from the previous year's ratio of 11.21 in 2022. A lower inventory turnover ratio could suggest that the company may be holding onto inventory for a longer period, which could tie up working capital and potentially lead to increased carrying costs.

Comparing the 2023 ratio to the ratio in 2021 at 8.40 and 2020 at 5.80, we see an upward trend in efficiency in managing inventory over the past few years. However, the ratio in 2023 is still lower than the peak ratio of 11.21 in 2022, indicating a possible inefficiency in inventory management compared to the previous year.

Overall, analyzing RPC, Inc.'s inventory turnover ratio over the past five years shows some variability in managing inventory efficiently. It is important for the company to closely monitor and optimize its inventory turnover to ensure effective working capital management and profitability.