Synopsys Inc (SNPS)

Inventory turnover

		Oct 31, 2024	Jul 31, 2024	Apr 30, 2024	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020
Cost of revenue (ttm)	US$ in thousands	1,295,271	1,252,591	1,222,347	1,170,191	1,125,370	1,075,748	1,086,497	1,091,067	1,063,697	1,015,702	949,587	910,762	861,777	851,600	839,542	809,821	794,690	752,884	746,508	752,922
Inventory	US$ in thousands	361,849	386,009	377,875	382,727	325,590	282,791	256,426	220,881	211,927	219,736	213,532	212,919	229,023	241,103	230,068	230,907	192,333	159,813	166,437	148,057
Inventory turnover		3.58	3.24	3.23	3.06	3.46	3.80	4.24	4.94	5.02	4.62	4.45	4.28	3.76	3.53	3.65	3.51	4.13	4.71	4.49	5.09

October 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,295,271K ÷ $361,849K
= 3.58

Inventory turnover is a key financial ratio that indicates how efficiently a company is managing its inventory levels. It is calculated by dividing the cost of goods sold by the average inventory level. A higher inventory turnover ratio signifies that a company is selling its inventory more quickly and efficiently.

Looking at Synopsys Inc's inventory turnover ratio over the past 20 quarters, we can see fluctuations in the ratio. The ratio ranged from a low of 3.06 to a high of 5.09 during this period. Generally, the trend indicates a moderate level of efficiency in managing inventory levels, with the ratio hovering around 3.5 to 5 in most quarters.

A decreasing trend in inventory turnover may suggest that the company is experiencing slower inventory turnover rates, which could potentially lead to excess inventory, storage costs, and obsolete stock. Conversely, an increasing trend in inventory turnover typically indicates improved efficiency in selling inventory.

It is important to note that inventory turnover ratio should be analyzed in conjunction with industry benchmarks and other financial metrics to get a comprehensive understanding of a company's operational efficiency and inventory management practices.