Teradyne Inc (TER)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	1,170,950	1,139,550	1,287,890	1,496,220	1,335,730
Inventory	US$ in thousands	298,492	309,974	325,019	243,330	222,189
Inventory turnover		3.92	3.68	3.96	6.15	6.01

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $1,170,950K ÷ $298,492K
= 3.92

Based on the provided inventory turnover data for Teradyne Inc, we observe fluctuations in the efficiency of managing inventory over the years. The inventory turnover ratio measures how many times a company sells and replaces its inventory within a given period.

In December 2020 and December 2021, Teradyne Inc exhibited healthy inventory turnover ratios of 6.01 and 6.15, indicating efficient inventory management. However, a decline in the ratio to 3.96 by December 2022 suggests a slower rate of inventory turnover. This trend continued in December 2023 and December 2024, with the ratios decreasing to 3.68 and 3.92, respectively.

A decreasing inventory turnover ratio can imply potential issues such as overstocking, obsolescence, or challenges in sales forecasting. Teradyne Inc may need to reassess its inventory management practices to optimize working capital and minimize holding costs. Further analysis of the underlying factors impacting inventory turnover is recommended to address any operational inefficiencies and improve overall financial performance.