Valero Energy Corporation (VLO)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	125,121,000	131,867,000	159,632,000	110,895,000	65,700,000
Inventory	US$ in thousands	7,761,000	7,583,000	6,752,000	6,265,000	6,038,000
Inventory turnover		16.12	17.39	23.64	17.70	10.88

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $125,121,000K ÷ $7,761,000K
= 16.12

Analyzing Valero Energy Corporation's inventory turnover over the past five years reveals a positive trend. The inventory turnover ratio measures how efficiently a company is managing its inventory by indicating how many times inventory is sold and replaced over a specific period.

In December 2020, Valero had an inventory turnover of 10.88, indicating that its inventory turned over approximately 10.88 times during that year. This suggests that the company was managing its inventory reasonably well.

The following year, in December 2021, Valero significantly improved its inventory turnover to 17.70. This increase indicates that the company became more efficient in selling and replacing its inventory, reflecting better inventory management practices.

By December 2022, Valero further improved its inventory turnover to 23.64, reaching the highest level in the analyzed period. This significant increase suggests that the company was able to sell and replace its inventory more frequently, potentially leading to lower carrying costs and better cash flow management.

In December 2023, the inventory turnover ratio slightly decreased to 17.39, indicating a minor decline in inventory management efficiency compared to the previous year. However, the ratio remained relatively high, signaling that Valero continued to effectively manage its inventory.

Lastly, by December 2024, Valero's inventory turnover decreased further to 16.12. While lower than the peak in 2022, this ratio still indicates a reasonable level of inventory efficiency, although not as high as in the previous years.

Overall, Valero Energy Corporation has shown a positive trend in inventory turnover over the past five years, with fluctuations in the ratio reflecting changes in inventory management practices and market conditions. The company's ability to maintain relatively high inventory turnover ratios indicates a proactive approach to managing its inventory levels effectively.