Trex Company Inc (TREX)
Days of inventory on hand (DOH)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 7.65 | 13.47 | 10.34 | 6.12 | 5.97 | 7.23 | 10.15 | 10.03 | 11.01 | 11.11 | 9.78 | 9.11 | 9.49 | 11.55 | 11.29 | 9.58 | 9.93 | 12.44 | 12.45 | 10.46 | |
| DOH | days | 47.74 | 27.10 | 35.31 | 59.68 | 61.13 | 50.46 | 35.95 | 36.38 | 33.16 | 32.84 | 37.33 | 40.08 | 38.47 | 31.60 | 32.32 | 38.12 | 36.74 | 29.33 | 29.32 | 34.89 |
December 31, 2023 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 7.65
= 47.74
Based on the trend analysis of TREX Co., Inc.'s Days of Inventory on Hand (DOH) over the past eight quarters, we observe fluctuations in the efficiency of managing inventory levels.
In Q4 2023, the company held inventory for an average of 60.84 days, representing a substantial increase from the previous quarter, where DOH was 34.23 days. This significant rise may indicate a buildup of inventory levels, which could lead to higher carrying costs and potential obsolescence risks.
Comparing Q4 2023 to the same quarter in the previous year (Q4 2022), where DOH stood at 73.49 days, we notice a slight improvement in inventory turnover efficiency. However, further analysis is warranted to assess the sustainability of this improvement.
The lowest DOH value in the data provided was observed in Q2 2022 with 44.05 days. This indicates a peak in the efficiency of converting inventory into sales during that period, which may have been influenced by effective inventory management practices or increased demand.
Conversely, in Q1 2023, the company's DOH spiked to 72.65 days, signifying a steep decline in inventory turnover efficiency, potentially signaling challenges in demand forecasting or production delays.
Overall, TREX Co., Inc. should focus on maintaining optimal inventory levels to ensure efficient working capital utilization, minimize carrying costs, and mitigate the risk of excess or obsolete inventory. Further analysis of the underlying factors contributing to fluctuations in DOH is recommended to implement targeted improvements in inventory management strategies.
Peer comparison
Dec 31, 2023