Advanced Drainage Systems Inc (WMS)

Inventory turnover

		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
Cost of revenue (ttm)	US$ in thousands	197,089	188,030	179,247	173,491	171,208	207,890	201,067	182,809	165,315	457,512	439,042	427,256	415,039	422,362	417,856	420,446	396,278	557,881	768,796	1,040,284
Inventory	US$ in thousands	464,200	405,409	385,090	434,631	463,994	459,029	479,171	489,492	494,324	465,518	425,244	330,713	300,961	238,860	223,268	239,239	282,398	261,347	248,914	230,284
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

March 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $197,089K ÷ $464,200K
= 0.42

The inventory turnover ratio for Advanced Drainage Systems Inc has shown fluctuations over the past few quarters. Historically, the company's inventory turnover ratio has been relatively stable, but in recent quarters, there has been a notable decline in the ratio.

The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times a company sells its average inventory balance in a given period. A higher inventory turnover ratio is generally seen as a positive indicator, as it suggests that the company is selling its inventory more quickly.

In the most recent quarter, the inventory turnover ratio was 0.42, indicating that the company is turning over its inventory approximately 0.42 times during the period. This represents a decrease from the previous quarter's ratio of 0.46. The declining trend in the inventory turnover ratio may suggest that the company is holding onto its inventory for a longer period, which could tie up capital and impact profitability.

It is important for Advanced Drainage Systems Inc to closely monitor its inventory management practices to improve its inventory turnover ratio and enhance operational efficiency. This could involve optimizing inventory levels, improving forecasting accuracy, and streamlining supply chain processes to help boost inventory turnover and overall financial performance.