Timken Company (TKR)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,138,100 | 3,932,800 | 3,658,300 | 3,120,700 | 3,321,800 |
| Inventory | US$ in thousands | 1,229,100 | 1,191,300 | 1,042,700 | 841,300 | 842,000 |
| Inventory turnover | 3.37 | 3.30 | 3.51 | 3.71 | 3.95 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $4,138,100K ÷ $1,229,100K
= 3.37
Timken Co.'s inventory turnover has exhibited a declining trend over the past five years, decreasing from 3.15 in 2019 to 2.65 in 2023. This suggests that the company is taking longer to sell its inventory, which could indicate potential issues such as overstocking or lower sales volumes relative to the level of inventory held. A lower inventory turnover ratio may tie up more of the company's resources in inventory and result in higher carrying costs.
It is important for Timken Co. to closely monitor and manage its inventory levels to optimize the utilization of resources, minimize carrying costs, and improve its overall efficiency. The company may consider implementing inventory management strategies such as just-in-time inventory systems, regular inventory assessments, and better forecasting techniques to enhance its inventory turnover ratio and operational performance.
Peer comparison
Dec 31, 2023