Simply Good Foods Co (SMPL)

Inventory turnover

		Feb 24, 2024	Nov 25, 2023	Aug 26, 2023	May 27, 2023	Feb 25, 2023	Nov 26, 2022	Aug 27, 2022	May 28, 2022	Feb 26, 2022	Nov 27, 2021	Aug 28, 2021	May 29, 2021	Feb 27, 2021	Nov 28, 2020	Aug 29, 2020	May 30, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019	May 25, 2019
Cost of revenue (ttm)	US$ in thousands	807,759	797,722	789,877	759,955	754,692	755,448	730,187	721,829	684,053	630,752	599,588	755,854	654,781	594,954	492,313	438,140	394,476	326,914	306,075	288,051
Inventory	US$ in thousands	115,785	123,175	116,591	105,437	114,008	124,119	125,479	111,709	120,937	112,433	97,269	78,579	82,771	76,067	59,085	84,517	79,552	90,378	38,085	41,574
Inventory turnover		6.98	6.48	6.77	7.21	6.62	6.09	5.82	6.46	5.66	5.61	6.16	9.62	7.91	7.82	8.33	5.18	4.96	3.62	8.04	6.93

February 24, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $807,759K ÷ $115,785K
= 6.98

Simply Good Foods Co's inventory turnover has shown fluctuations over the past few quarters, ranging from a low of 3.62 to a high of 9.62. The average inventory turnover for the period under review is approximately 6.74, indicating that, on average, the company sells through its inventory almost 6.74 times per year.

A higher inventory turnover signifies that the company is selling its products more efficiently and is managing its inventory well. This could be due to effective inventory management practices, accurate demand forecasting, and efficient sales strategies.

However, the fluctuation in inventory turnover figures suggests some inconsistencies in the company's inventory management. For instance, a significant drop in inventory turnover from 9.62 in May 2021 to 5.18 in August 2021 raises concerns about potential inventory management challenges or changes in sales patterns during that period.

Overall, Simply Good Foods Co should strive to maintain a consistent and optimal inventory turnover ratio to ensure efficient use of resources and maximize profitability. Monitoring and analyzing inventory turnover regularly can help the company make informed decisions regarding inventory levels, production, and sales strategies.