Steel Dynamics Inc (STLD)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	15,372,100	16,142,900	13,046,400	8,166,750	8,934,010
Inventory	US$ in thousands	2,894,630	3,129,960	3,531,130	1,843,550	1,689,040
Inventory turnover		5.31	5.16	3.69	4.43	5.29

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $15,372,100K ÷ $2,894,630K
= 5.31

The inventory turnover ratio measures how efficiently a company is managing its inventory by indicating how many times a company sells and replaces its inventory during a specific period. A higher inventory turnover ratio generally signifies that a company is selling its inventory quickly and efficiently.

Based on the data provided for Steel Dynamics Inc., the inventory turnover ratio has fluctuated over the past five years. In 2023, the inventory turnover ratio was 5.10, down slightly from 5.16 in 2022 and highest among the five years. This indicates that in 2023, the company converted its inventory into sales approximately 5.10 times during the year.

In 2021, the inventory turnover ratio was 3.69, the lowest among the five years, showing a decrease in inventory turnover efficiency compared to the other years. The ratio improved in 2022 and further in 2023, indicating better management of inventory levels.

Overall, Steel Dynamics Inc. has demonstrated relatively stable inventory turnover performance over the past five years, with a general trend towards improvement in recent years. The company appears to have been able to efficiently manage its inventory levels, indicating effective control over its supply chain and production processes.