Texas Instruments Incorporated (TXN)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	6,547,000	6,500,000	6,540,000	6,550,000	6,500,000	6,437,000	6,344,000	6,310,000	6,257,000	6,156,000	6,023,000	5,939,000	5,968,000	5,916,000	5,789,000	5,443,000	5,192,000	5,015,000	4,976,000	5,127,000
Inventory	US$ in thousands	4,527,000	4,296,000	4,106,000	4,083,000	3,999,000	3,908,000	3,729,000	3,288,000	2,757,000	2,404,000	2,199,000	2,060,000	1,910,000	1,863,000	1,856,000	1,890,000	1,955,000	2,072,000	2,136,000	2,003,000
Inventory turnover		1.45	1.51	1.59	1.60	1.63	1.65	1.70	1.92	2.27	2.56	2.74	2.88	3.12	3.18	3.12	2.88	2.66	2.42	2.33	2.56

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $6,547,000K ÷ $4,527,000K
= 1.45

The inventory turnover ratio for Texas Instruments Incorporated has shown fluctuations over the past few years. The ratio measures how many times the company's inventory is sold and replaced during a certain period. A higher inventory turnover ratio is generally preferred as it indicates that the company is selling its inventory more quickly.

From March 31, 2020, to September 30, 2021, the inventory turnover ratio for Texas Instruments steadily increased from 2.56 to 3.18, indicating an improvement in the efficiency of inventory management and sales during this period. This may suggest that the company was able to sell its inventory more rapidly, which can lead to better cash flow and reduced risk of obsolescence.

However, from December 31, 2021, to December 31, 2024, the inventory turnover ratio started to decline, dropping from 3.12 to 1.45. A decreasing inventory turnover ratio may signify a potential issue with overstocking, slow-moving inventory, or declining sales.

Furthermore, the consistent decline in the inventory turnover ratio from March 31, 2022, to December 31, 2024, could be a cause for concern. It might indicate that Texas Instruments is facing challenges in managing its inventory efficiently or that its sales are slowing down.

Overall, a lower inventory turnover ratio could imply that the company is holding onto its inventory for a longer period, which may tie up capital and increase the risk of inventory obsolescence. It would be essential for Texas Instruments to closely monitor and address the factors influencing its inventory turnover to optimize its inventory management and operational efficiency.