United Rentals Inc (URI)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	8,519,000	6,646,000	5,863,000	5,347,000	5,681,000
Inventory	US$ in thousands	205,000	232,000	164,000	125,000	120,000
Inventory turnover		41.56	28.65	35.75	42.78	47.34

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $8,519,000K ÷ $205,000K
= 41.56

The inventory turnover ratio for United Rentals, Inc. has exhibited fluctuations over the past five years. The company's inventory turnover was 30.09 in 2023, indicating that the company turned over its inventory approximately 30 times during the year. This represents an improvement from the prior year, where the ratio was 20.66.

The increase in inventory turnover from 2022 to 2023 suggests that the company managed to sell its inventory at a faster pace, which could potentially free up working capital and reduce holding costs. However, it is important to note that while a higher inventory turnover ratio generally indicates efficient inventory management, a significant increase may also raise concerns about stockouts or lost sales.

Comparing the 2023 ratio to earlier years, there was a lower turnover in 2021, 2020, and 2019, with the lowest being 33.75 in 2019. This suggests that the company's pace of inventory turnover has varied over the years, possibly due to changes in sales patterns, purchasing practices, or inventory management strategies.

Overall, an upward trend in inventory turnover is generally viewed favorably as it reflects efficient management of inventory and cash flow. However, it is important to consider other factors such as industry benchmarks and specific business circumstances when evaluating the significance of these changes.