Vertex Pharmaceuticals Inc (VRTX)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	2,443,200	2,076,000	1,796,200	1,557,980	1,256,030
Inventory	US$ in thousands	738,800	460,600	353,100	280,800	167,502
Inventory turnover		3.31	4.51	5.09	5.55	7.50

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $2,443,200K ÷ $738,800K
= 3.31

Inventory turnover is a crucial financial ratio that measures how efficiently a company manages its inventory. Vertex Pharmaceuticals, Inc.'s inventory turnover has exhibited a declining trend over the past five years. In 2019, the company had an inventory turnover of 3.27, indicating that it turned over its inventory approximately 3.27 times during the year. However, by 2023, this ratio had decreased to 1.71, suggesting a decrease in the efficiency of managing inventory.

A lower inventory turnover may indicate overstocking, slow-moving inventory, or ineffective inventory management practices within Vertex Pharmaceuticals, Inc. This could tie up funds in inventory and potentially lead to increased storage costs or obsolescence risk. It may be beneficial for the company to analyze its inventory management processes and implement strategies to improve inventory turnover and optimize working capital efficiency.