SolarEdge Technologies Inc (SEDG)

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	1,778,660	1,842,658	1,461,917	1,859,528	2,272,705	2,529,891	2,562,125	2,433,272	2,265,631	2,027,400	1,766,521	1,545,254	1,334,547	1,190,905	1,067,094	972,117	997,912	1,025,104	1,066,319	1,051,771
Inventory	US$ in thousands	645,897	798,383	1,505,100	1,549,120	1,443,450	1,177,800	984,194	874,212	729,201	561,352	470,272	432,504	380,143	304,713	321,915	340,038	331,696	297,027	264,460	198,557
Inventory turnover		2.75	2.31	0.97	1.20	1.57	2.15	2.60	2.78	3.11	3.61	3.76	3.57	3.51	3.91	3.31	2.86	3.01	3.45	4.03	5.30

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,778,660K ÷ $645,897K
= 2.75

The inventory turnover of SolarEdge Technologies Inc has shown a gradual decline over the past few years, indicating potentially inefficient management of inventory. The turnover ratio decreased from 5.30 on March 31, 2020, to 0.97 on June 30, 2024. This declining trend suggests that the company is holding onto its inventory for longer periods, which may tie up capital and lead to increased carrying costs.

It is essential for a company to maintain a balance in managing its inventory levels efficiently to meet customer demand while minimizing the costs associated with excess inventory. The significant drop in the inventory turnover ratio may raise concerns about the company's inventory management practices, potentially leading to obsolete or slow-moving inventory and reduced profitability.

SolarEdge Technologies Inc would benefit from closely monitoring its inventory levels, identifying slow-moving items, and implementing strategies to optimize inventory turnover. By improving inventory turnover, the company can enhance cash flow, reduce carrying costs, and potentially improve its overall financial performance.