Reliance Steel & Aluminum Co (RS)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 12,864,800 | 14,328,300 | 11,952,900 | 6,036,800 | 7,644,400 |
| Inventory | US$ in thousands | 2,043,200 | 1,995,300 | 2,065,000 | 1,420,400 | 1,645,700 |
| Inventory turnover | 6.30 | 7.18 | 5.79 | 4.25 | 4.65 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $12,864,800K ÷ $2,043,200K
= 6.30
The inventory turnover of Reliance Steel & Aluminum Co. has fluctuated over the past five years. In 2023, the inventory turnover ratio was 5.02, indicating that the company sold and replaced its inventory approximately 5.02 times during the year. This was a slight decrease from 5.90 in 2022 but still higher than the ratios in 2021, 2020, and 2019, which were 4.65, 4.25, and 4.65, respectively.
A higher inventory turnover ratio generally indicates that a company is efficiently managing its inventory by quickly selling and replenishing stock. It suggests that inventory is not sitting idle for prolonged periods, which could tie up cash flow and lead to potential obsolescence.
While the downward trend from 2022 to 2023 may raise some concerns, the overall inventory turnover ratio for Reliance Steel & Aluminum Co. remains at a relatively healthy level. It is important for the company to closely monitor its inventory management practices to ensure efficient use of resources and maintain a healthy balance between customer demand and inventory levels.
Peer comparison
Dec 31, 2023