Textron Inc (TXT)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,154,000 | 998,000 | 1,113,000 | 1,055,000 | 12,509,000 |
| Inventory | US$ in thousands | 3,914,000 | 3,550,000 | 3,468,000 | 3,513,000 | 4,069,000 |
| Inventory turnover | 0.29 | 0.28 | 0.32 | 0.30 | 3.07 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $1,154,000K ÷ $3,914,000K
= 0.29
The inventory turnover ratio for Textron Inc has been relatively low and fluctuating over the past five years. The ratio indicates how many times a company's inventory is sold and replaced during a certain period, with higher values generally indicating more efficient inventory management.
In this case, the inventory turnover ratios for Textron Inc have been consistently below 1, except for a significant anomaly in 2019. This suggests that the company is taking a longer time to sell and replace its inventory, which may indicate overstocking, slow-moving inventory, or ineffective inventory management practices.
The low and decreasing trend in inventory turnover from 2020 to 2022 further highlights a potential issue with excess inventory, which can tie up capital and increase holding costs. However, the sudden spike in inventory turnover in 2019 may indicate a temporary improvement in inventory management efficiency that was not sustained in subsequent years.
Overall, Textron Inc may benefit from reassessing its inventory management strategies to improve turnover rates, reduce holding costs, and enhance overall operational efficiency.
Peer comparison
Dec 31, 2023