Vital Energy Inc. (VTLE)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	598,071	434,372	328,054	1,211,620	972,361
Inventory	US$ in thousands	13,723	6,070	10,160	3,196	5,484
Inventory turnover		43.58	71.56	32.29	379.11	177.31

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $598,071K ÷ $13,723K
= 43.58

Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory. A higher inventory turnover ratio indicates that the company is selling its inventory quickly and efficiently.

Vital Energy Inc.'s inventory turnover has fluctuated over the past five years. In 2023, the inventory turnover ratio was 43.58, indicating that the company turned over its inventory approximately 43.58 times during the year. This is a decrease from 2022 when the ratio was 71.56. The significant drop in 2023 could be a cause for concern as it suggests that the company might be struggling to sell its inventory as quickly as in the previous year.

Comparing the 2023 ratio to the ratios in 2021, 2020, and 2019, we see that the inventory turnover has varied significantly. In 2019 and 2020, the ratios were substantially higher at 177.31 and 379.11, respectively, indicating very efficient inventory management during those years. However, in 2021, the ratio dropped to 32.29, suggesting a temporary slowdown in inventory turnover.

Overall, Vital Energy Inc. should closely monitor its inventory turnover ratio to ensure that it maintains a balance between managing inventory levels efficiently and meeting customer demand. A decreasing trend in inventory turnover could indicate potential issues such as overstocking, slow sales, or changing customer preferences that need to be addressed to improve the company's overall financial performance.