Advanced Drainage Systems Inc (WMS)
Days of inventory on hand (DOH)
| Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 0.42 | 0.46 | 0.47 | 0.40 | 0.37 | 0.45 | 0.42 | 0.37 | 0.33 | 0.98 | 1.03 | 1.29 | 1.38 | 1.77 | 1.87 | 1.76 | 1.40 | 2.13 | 3.09 | 4.52 | |
| DOH | days | 859.68 | 786.97 | 784.16 | 914.40 | 989.19 | 805.93 | 869.85 | 977.33 | 1,091.42 | 371.39 | 353.53 | 282.52 | 264.68 | 206.42 | 195.03 | 207.69 | 260.11 | 170.99 | 118.18 | 80.80 |
March 31, 2024 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 0.42
= 859.68
The Days of Inventory on Hand (DOH) is a measure used to assess how efficiently a company manages its inventory. It indicates the number of days it takes for a company to sell through its inventory. A lower DOH ratio suggests that inventory is moving quickly, while a higher DOH ratio implies slower inventory turnover.
Analyzing the DOH trend for Advanced Drainage Systems Inc over the past few quarters reveals fluctuations in the efficiency of inventory management. From December 2019 to March 2020, the DOH decreased significantly, indicating an improvement in inventory turnover efficiency. However, since then, the DOH has been on an upward trend, peaking at 1,091.42 days on March 31, 2022.
The prolonged increase in the DOH from 2020 to 2022 suggests potential issues with inventory management efficiency. A high DOH ratio can tie up capital in unsold inventory, leading to increased carrying costs and potentially obsolete inventory. This trend may warrant further investigation into factors impacting inventory levels, such as demand fluctuations, production inefficiencies, or supply chain disruptions.
It is essential for Advanced Drainage Systems Inc to closely monitor its inventory levels and implement strategies to optimize inventory turnover, such as improving demand forecasting, streamlining production processes, or reassessing procurement practices. By addressing the root causes of the high DOH ratio, the company can enhance operational efficiency and financial performance in the long run.