Gentherm Inc (THRM)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Cost of revenue (ttm)	US$ in thousands	1,313,917	1,302,503	1,304,747	1,326,848	1,331,668	1,352,386	1,319,939	1,206,804	1,115,025	1,001,537	914,175	897,283	894,710	918,254	919,558	834,434	796,955	761,928	761,465	845,830
Inventory	US$ in thousands	227,356	233,746	214,370	219,584	205,892	205,856	207,940	218,463	218,248	233,895	187,784	176,168	159,477	154,296	138,246	132,057	122,401	114,636	112,630	117,641
Inventory turnover		5.78	5.57	6.09	6.04	6.47	6.57	6.35	5.52	5.11	4.28	4.87	5.09	5.61	5.95	6.65	6.32	6.51	6.65	6.76	7.19

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,313,917K ÷ $227,356K
= 5.78

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory. For Gentherm Inc, the inventory turnover has shown a declining trend over the past few years. In March 2020, the inventory turnover stood at 7.19 times, indicating that the company turned over its inventory approximately 7.19 times during that period. However, the ratio gradually decreased to 5.78 times by December 2024.

A declining inventory turnover ratio suggests that Gentherm Inc may be facing challenges in selling its inventory efficiently. This could lead to excess inventory, carrying costs, and potential obsolescence risks. It is essential for the company to address this trend by improving its inventory management practices, optimizing procurement processes, and potentially reassessing its product mix and demand forecasting methods to align inventory levels more closely with sales.

Furthermore, a lower inventory turnover ratio may also indicate slower sales growth relative to the growth in inventory levels, signaling potential inefficiencies in production or sales channels. By closely monitoring and improving inventory turnover, Gentherm Inc can enhance its operational efficiency, reduce holding costs, and free up working capital for other investments or operational needs.