Interface Inc (TILE)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,167,640 | 1,229,800 | 1,104,700 | 1,154,250 | 1,218,920 |
| Inventory | US$ in thousands | 279,079 | 306,327 | 265,092 | 228,725 | 253,584 |
| Inventory turnover | 4.18 | 4.01 | 4.17 | 5.05 | 4.81 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $1,167,640K ÷ $279,079K
= 4.18
Inventory turnover is a crucial financial ratio that measures how efficiently a company is managing its inventory levels. Based on the data provided for Interface Inc., we can see that the inventory turnover ratio has fluctuated over the past five years.
In 2023, the inventory turnover ratio was 2.94, indicating that the company was able to sell and replace its inventory approximately 2.94 times during the year. This represents a slight improvement compared to the previous year, where the ratio was 2.81. However, it is still lower than the ratios from 2021 (3.03) and 2020 (3.22).
A higher inventory turnover ratio generally indicates that a company is effectively managing its inventory levels, avoiding excess or obsolete inventory. It also suggests that a company is able to quickly convert its inventory into sales, which can improve cash flow and profitability.
On the other hand, a decreasing inventory turnover ratio could signal potential issues such as overstocking, slow-moving inventory, or declining sales. Companies should strive to optimize their inventory turnover ratio to strike a balance between maintaining adequate inventory levels to meet demand and minimizing carrying costs.
In conclusion, Interface Inc. should continue to monitor and manage its inventory levels effectively to improve its inventory turnover ratio and overall operational efficiency.
Peer comparison
Dec 31, 2023