Super Micro Computer Inc (SMCI)

Days of inventory on hand (DOH)

		Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Inventory turnover		4.04	2.84	2.90	3.30	4.48
DOH	days	90.34	128.33	125.69	110.48	81.41

June 30, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 4.04
= 90.34

Days of Inventory on Hand (DOH) measures the average number of days it takes for a company to sell its inventory. A lower DOH is generally preferred as it indicates that inventory is being sold more quickly, while a higher DOH could suggest slower inventory turnover, potentially leading to higher inventory carrying costs and an increased risk of obsolete inventory.

Looking at Super Micro Computer Inc's DOH over the past five years, we observe fluctuations in the metric. In 2019, the DOH was at 81.41 days, indicating relatively efficient inventory management. However, this figure increased significantly to 110.48 days in 2020, suggesting a slowdown in inventory turnover. The trend continued in 2021 and 2022, with DOH reaching 125.69 days and 128.33 days, respectively, indicating a concerning trend of slower inventory turnover.

However, there was a notable improvement in 2023, with the DOH decreasing to 90.34 days. This suggests that the company has been able to manage its inventory more efficiently, potentially reducing carrying costs and the risk of obsolete inventory.

Overall, the fluctuation in Super Micro Computer Inc's DOH over the years indicates the need for continued attention to inventory management. While the recent decrease is a positive sign, it will be important to monitor future trends to ensure sustained improvement in inventory turnover efficiency.