Southern Company (SO)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	6,175,000	13,545,000	18,458,000	13,052,000	10,478,000
Inventory	US$ in thousands	3,369,000	3,352,000	2,677,000	2,355,000	2,488,000
Inventory turnover		1.83	4.04	6.90	5.54	4.21

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $6,175,000K ÷ $3,369,000K
= 1.83

Inventory turnover is an important financial ratio that indicates how efficiently a company manages its inventory. In the case of Southern Company, the trend of inventory turnover over the past five years shows some fluctuations.

As of December 31, 2020, the inventory turnover ratio stood at 4.21, indicating that the company generated $4.21 in sales for every dollar of inventory. This ratio improved significantly by December 31, 2022, reaching 6.90, showing that Southern Company was managing its inventory more efficiently and converting it into sales at a faster rate.

However, in the following years, the inventory turnover ratio declined. As of December 31, 2024, the ratio dropped to 1.83. This decrease suggests that Southern Company may have been carrying excess inventory relative to its sales during that period, which can tie up capital and hinder profitability.

Overall, Southern Company's inventory turnover has shown variability over the past five years, with a notable improvement in 2022 but a subsequent decline in later years. The company may need to focus on optimizing its inventory management strategies to ensure efficient use of resources and maintain healthy turnover ratios.