Teradyne Inc (TER)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	1,139,550	1,287,890	1,496,220	1,335,730	955,136
Inventory	US$ in thousands	309,974	325,019	243,330	222,189	196,691
Inventory turnover		3.68	3.96	6.15	6.01	4.86

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $1,139,550K ÷ $309,974K
= 3.68

Teradyne, Inc.'s inventory turnover has experienced fluctuations over the past five years. The inventory turnover ratio indicates the number of times a company's inventory is sold and replaced within a given period. A higher ratio is generally preferred as it suggests efficient management of inventory.

In 2023, the inventory turnover ratio decreased to 3.68 from 3.96 in 2022. This decline may suggest that Teradyne, Inc. took longer to sell and replace its inventory in 2023 compared to the previous year. It could indicate potential inefficiencies in inventory management or changes in sales patterns.

Comparing the 2023 ratio to earlier years, it remains lower than the ratios reported in 2021 and 2020, both of which were above 6. This indicates that Teradyne, Inc. was more efficient in managing its inventory in those years, selling and replacing inventory more frequently.

However, the 2023 ratio is higher than the 2019 ratio of 4.86, indicating some improvement in inventory turnover efficiency compared to five years ago. Overall, further analysis of the reasons behind the fluctuations in inventory turnover would be beneficial to understand the company's inventory management strategies and their impact on financial performance.