Sitime Corporation (SITM)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	98,203	61,905	100,643	79,346	58,224
Inventory	US$ in thousands	76,741	65,539	57,650	23,630	12,350
Inventory turnover		1.28	0.94	1.75	3.36	4.71

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $98,203K ÷ $76,741K
= 1.28

Inventory turnover is a vital financial ratio that measures the efficiency of Sitime Corporation in managing its inventory. A declining trend in inventory turnover over the years can indicate potential issues such as overstocking, slow-moving inventory, or inefficiencies in production and sales processes.

Sitime Corporation's inventory turnover has decreased from 4.71 in 2020 to 1.28 in 2024. This downward trend suggests that the company is taking longer to sell its inventory, which could result in higher carrying costs, obsolete inventory, and lower cash flows.

A low inventory turnover ratio can also indicate poor sales, weak demand for the company's products, or ineffective inventory management practices. Sitime Corporation may need to reevaluate its inventory control strategies, optimize its production levels, or implement better demand forecasting to improve its inventory turnover and overall operational efficiency.