Sanmina Corporation (SANM)

Days of inventory on hand (DOH)

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Inventory turnover		5.72	4.32	5.98	7.47	8.49
DOH	days	63.79	84.57	61.03	48.86	43.01

September 30, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 5.72
= 63.79

The Days of Inventory on Hand (DOH) ratio measures the average number of days it takes for a company to sell its inventory. A lower DOH indicates better inventory management, as it suggests that the company is efficiently turning over its inventory, thereby minimizing carrying costs and potential obsolescence.

Looking at the trend in Sanmina Corp's DOH over the past five years, we observe fluctuating values. In 2019, the DOH was 43.01 days and increased to 48.86 days in 2020. This rise indicates a slight slowdown in the company's inventory turnover. However, the DOH increased significantly to 60.97 days in 2021, suggesting a notable increase in the time it took to sell the inventory. The trend continued as the DOH surged to 85.14 days in 2022, signifying a substantial increase in the time required to sell the inventory. However, in 2023, the DOH decreased to 65.82 days, indicating a slight improvement in the inventory turnover.

The rising DOH values from 2019 to 2022 may warrant further investigation into Sanmina Corp's inventory management practices. An increasing DOH can tie up working capital, lead to higher carrying costs, and potentially signify declining sales or excess inventory. Conversely, the slight improvement in 2023 suggests a potential correction in the inventory management process.

It may be beneficial to compare Sanmina Corp's DOH to industry benchmarks to gain a better understanding of its relative inventory performance. Additionally, assessing the impact of these DOH fluctuations on the company's overall financial and operational performance can provide valuable insights for investors and stakeholders.