Sensata Technologies Holding NV (ST)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	2,792,820	2,712,050	2,542,430	2,119,040	2,267,430
Inventory	US$ in thousands	713,485	644,875	588,231	451,005	506,678
Inventory turnover		3.91	4.21	4.32	4.70	4.48

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $2,792,820K ÷ $713,485K
= 3.91

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory by evaluating how many times it sells and replaces its stock of goods in a given period. In the case of Sensata Technologies Holding Plc, we observe a downward trend in inventory turnover over the past five years, declining from 4.48 in 2019 to 3.91 in 2023.

A decreasing inventory turnover ratio may indicate that Sensata Technologies Holding Plc is taking longer to sell its inventory, which could potentially lead to excess or obsolete stock, increased storage costs, and reduced liquidity. It may also suggest less effective inventory management practices or challenges in demand forecasting.

Although a lower inventory turnover ratio could raise concerns about operational efficiency and inventory control, it is essential to consider the company's industry norms, business model, and seasonality factors when interpreting this trend. Further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of Sensata Technologies Holding Plc's inventory management effectiveness.