Thermo Fisher Scientific Inc (TMO)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	24,771,000	25,295,000	25,415,000	18,977,000	15,713,000
Inventory	US$ in thousands	4,978,000	5,088,000	5,634,000	5,051,000	4,029,000
Inventory turnover		4.98	4.97	4.51	3.76	3.90

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $24,771,000K ÷ $4,978,000K
= 4.98

Thermo Fisher Scientific Inc's inventory turnover has shown a generally increasing trend over the period from December 31, 2020, to December 31, 2024. The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times the company sells and replaces its inventory during a specific period.

Starting at 3.90 in December 31, 2020, the inventory turnover increased to 4.98 by December 31, 2024. This suggests that the company's inventory management has improved over the years, as it has been selling and replacing its inventory more frequently.

An increasing inventory turnover ratio is generally positive as it indicates that inventory is being managed efficiently, with products not sitting idle for long periods. This can lead to lower carrying costs, reduced risk of obsolescence, and potentially higher profits.

Thermo Fisher Scientific Inc's inventory turnover ratio reaching 4.98 by the end of 2024 reflects positively on the company's inventory management strategy, signaling effective control and utilization of inventory to generate sales. It is essential for the company to keep monitoring and maintaining its inventory turnover to ensure optimal efficiency in its operations.