Williams Companies Inc (WMB)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 792,000 | 882,000 | 631,000 | 2,092,000 | 1,405,000 |
| Inventory | US$ in thousands | 274,000 | 320,000 | 379,000 | 136,000 | 125,000 |
| Inventory turnover | 2.89 | 2.76 | 1.66 | 15.38 | 11.24 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $792,000K ÷ $274,000K
= 2.89
Inventory turnover is a key financial ratio that measures how efficiently a company manages its inventory by indicating the number of times the inventory is sold and replaced within a specific period.
In the case of Williams Cos Inc, the inventory turnover has been declining over the past five years. The ratio decreased from 15.69 in 2019 to 6.88 in 2023. A decreasing inventory turnover may suggest that the company is holding onto inventory for longer periods, which can tie up working capital and lead to potential obsolescence or storage costs.
A lower inventory turnover could also indicate inefficiencies in the supply chain, poor demand forecasting, or challenges in managing inventory levels effectively. It is essential for Williams Cos Inc to closely monitor and address the reasons behind the declining inventory turnover to optimize working capital and improve operational efficiency.
Peer comparison
Dec 31, 2023