Southern Company (SO)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,890,000 | 2,130,000 | 1,764,000 | 1,718,000 | 1,889,000 |
| Inventory | US$ in thousands | 3,352,000 | 2,677,000 | 2,355,000 | 2,488,000 | 2,388,000 |
| Inventory turnover | 0.56 | 0.80 | 0.75 | 0.69 | 0.79 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $1,890,000K ÷ $3,352,000K
= 0.56
The inventory turnover of Southern Company has fluctuated over the past five years. In 2023, the inventory turnover ratio decreased to 2.22 from 4.42 in 2022, indicating that the company's efficiency in managing and selling its inventory decreased significantly. This could suggest issues such as overstocking, slow-moving inventory, or inefficient inventory management practices.
Comparing to the ratios in previous years, the inventory turnover was higher in 2022 at 4.42 compared to 2019 and 2021, indicating that the company was more efficient in selling its inventory in that year. However, the ratio in 2023 dropped significantly below the levels of the previous years, indicating a potential concern for Southern Company in effectively managing its inventory levels.
Overall, a lower inventory turnover ratio may suggest potential inefficiencies or issues in inventory management, whereas a higher ratio indicates that the company is efficiently selling its inventory. Southern Company may need to reassess its inventory management strategies to improve efficiency and profitability.
Peer comparison
Dec 31, 2023