Waters Corporation (WAT)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	2,638,820	2,074,800	1,970,570	1,843,500	1,624,330
Inventory	US$ in thousands	477,261	516,236	455,710	356,095	304,281
Inventory turnover		5.53	4.02	4.32	5.18	5.34

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $2,638,820K ÷ $477,261K
= 5.53

Based on the provided data, Waters Corporation's inventory turnover has been relatively stable over the past five years. The inventory turnover ratio measures how efficiently a company manages its inventory by indicating the number of times inventory is sold and replaced within a given period.

In December 2020, the inventory turnover ratio was 5.34, indicating that inventory was turned over approximately 5.34 times during that year. The ratio slightly decreased to 5.18 by December 2021, suggesting a slight decline in the efficiency of inventory management.

However, in the following years, there was a more noticeable decrease in inventory turnover. By December 2022, the ratio dropped to 4.32, indicating that the company took longer to sell and replace its inventory compared to previous years. This trend continued as the ratio further decreased to 4.02 by December 2023, reflecting a potential buildup of excess inventory or slower sales.

There was a significant improvement in inventory turnover by December 2024, with the ratio increasing to 5.53. This suggests that Waters Corporation was able to enhance its inventory management practices and sell inventory more efficiently during that year.

Overall, while there were fluctuations in inventory turnover over the five-year period, the company managed to maintain a reasonable level of efficiency in managing its inventory. Tracking inventory turnover is crucial for assessing operational performance and liquidity, as it provides insights into how effectively inventory is being utilized to generate sales.