Terex Corporation (TEX)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,974,900 | 3,546,500 | 3,129,400 | 2,537,100 | 3,465,300 |
| Inventory | US$ in thousands | 1,186,000 | 988,400 | 813,500 | 610,400 | 847,700 |
| Inventory turnover | 3.35 | 3.59 | 3.85 | 4.16 | 4.09 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $3,974,900K ÷ $1,186,000K
= 3.35
Terex Corp.'s inventory turnover has exhibited a declining trend over the past five years, decreasing from 4.09 in 2019 to 3.35 in 2023. A decreasing inventory turnover may indicate inefficiencies in managing inventory levels or potential issues with sales.
A lower inventory turnover ratio suggests that the company is holding onto its inventory for a longer period, which may tie up working capital and increase holding costs. This could also point towards potential obsolescence or slow-moving inventory that needs to be addressed to optimize operations and maintain profitability.
It is important for Terex Corp. to closely monitor its inventory turnover ratio and take appropriate actions, such as improving inventory management practices, implementing better demand forecasting, or reassessing procurement strategies, to enhance operational efficiency and maximize financial performance.