Vertex Pharmaceuticals Inc (VRTX)

Inventory turnover

		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
Cost of revenue (ttm)	US$ in thousands	2,443,200	2,263,400	2,217,100	2,123,000	2,076,000	2,028,752	1,927,253	1,872,794	1,796,200	1,656,692	1,592,724	1,546,407	1,506,756	1,472,101	1,405,173	1,321,091	1,218,473	1,142,687	1,087,258	1,036,763
Inventory	US$ in thousands	738,800	688,700	603,500	535,100	460,600	388,200	367,700	338,900	353,100	333,456	321,620	298,863	280,800	245,460	219,218	187,087	167,502	162,306	143,017	136,698
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

December 31, 2023 calculation

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

Vertex Pharmaceuticals, Inc.'s inventory turnover has been fluctuating over the past eight quarters. In Q1 2022, the inventory turnover was 2.83, indicating that the company sold and replaced its inventory 2.83 times during that quarter. However, the inventory turnover has been gradually decreasing since then, reaching a low of 1.71 in Q4 2023.

A decreasing trend in inventory turnover could imply that Vertex Pharmaceuticals, Inc. is struggling to sell its inventory efficiently or may be experiencing inventory management issues. This could potentially lead to higher holding costs and obsolete inventory, negatively impacting the company's profitability.

It is essential for Vertex Pharmaceuticals, Inc. to closely monitor its inventory turnover ratios and identify ways to optimize inventory management to improve operational efficiency and overall financial performance.