Vertex Pharmaceuticals Inc (VRTX)

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		3.31	3.29	3.67	3.97	4.51	5.23	5.24	5.53	5.09	4.97	4.95	5.17	5.37	6.00	6.41	7.06	7.27	7.04	7.60	7.58
DOH	days	110.37	111.06	99.35	92.00	80.98	69.84	69.64	66.05	71.75	73.47	73.70	70.54	68.02	60.86	56.94	51.69	50.18	51.84	48.01	48.13

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 3.31
= 110.37

Days of Inventory on Hand (DOH) is a crucial metric that measures the average number of days a company holds on to its inventory before selling it. A higher DOH value indicates a longer period of time for inventory turnover, potentially signaling inefficient inventory management.

Upon review of Vertex Pharmaceuticals, Inc.'s DOH over the past eight quarters, a noticeable trend emerges. The company's DOH has been steadily increasing, starting at 129.17 days in Q1 2022 and reaching 213.64 days in Q4 2023. This upward trajectory suggests that Vertex Pharmaceuticals may be experiencing challenges in managing its inventory efficiently.

The significant uptrend in DOH over multiple quarters could indicate potential overstocking or slower sales, which may lead to increased storage costs, risk of obsolescence, and reduced liquidity. It is essential for the company to closely monitor its inventory levels and implement strategies to optimize inventory turnover to improve operational efficiency and profitability.