Thermo Fisher Scientific Inc (TMO)

Days of inventory on hand (DOH)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover		2.20	2.03	1.97	2.15	2.35
DOH	days	165.87	179.51	185.72	170.05	155.25

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 2.20
= 165.87

The days of inventory on hand (DOH) for Thermo Fisher Scientific Inc. has shown a decreasing trend over the five-year period from 2019 to 2023. This indicates that the company has been efficiently managing its inventory levels, leading to a faster turnover of inventory.

In 2019, Thermo Fisher had an average of 86.54 days of inventory on hand, which decreased to 90.70 days in 2020. However, the trend reversed in the following years with further improvements. By the end of 2023, the DOH had reduced to 72.10 days, reflecting the company's increasing efficiency in managing its inventory.

A lower DOH implies that Thermo Fisher Scientific is converting its inventory into sales at a quicker pace, which can lead to lower holding costs and potentially higher profitability. This trend indicates effective inventory management practices within the company, enabling it to optimize working capital utilization and improve overall operational efficiency.