Rush Enterprises A Inc (RUSHA)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	6,331,930	5,614,510	4,033,840	3,860,470	4,784,220
Inventory	US$ in thousands	1,801,450	1,429,430	1,020,140	858,291	1,326,080
Inventory turnover		3.51	3.93	3.95	4.50	3.61

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $6,331,930K ÷ $1,801,450K
= 3.51

Rush Enterprises A Inc's inventory turnover has shown fluctuations over the past five years. The inventory turnover ratio measures the efficiency of the company in managing its inventory by indicating how many times its inventory is sold and replaced in a given period. A higher inventory turnover ratio generally suggests effective inventory management and swift sales.

Looking at the trend, we see a decrease in inventory turnover from 4.50 in 2020 to 3.51 in 2023. This indicates that the company is holding onto its inventory for a slightly longer period in recent years, which could potentially tie up more capital in unsold inventory. However, it is essential to further investigate the reasons behind this decrease to determine whether it is due to slower sales, an increase in average inventory levels, or other operational factors.

While the inventory turnover ratio has decreased over the years, it remains above 3.0, indicating that Rush Enterprises A Inc generally has a moderate level of efficiency in managing its inventory. Investors and stakeholders should continue to monitor this ratio in conjunction with other financial metrics to gain a comprehensive understanding of the company's operational performance and efficiency in inventory management.