Watsco Inc (WSO)
Days of inventory on hand (DOH)
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Inventory turnover | 4.02 | 3.93 | 3.83 | 4.14 | 4.83 | |
| DOH | days | 90.73 | 92.93 | 95.37 | 88.27 | 75.61 |
December 31, 2024 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 4.02
= 90.73
The days of inventory on hand (DOH) for Watsco Inc have shown an increasing trend over the past five years, rising from 75.61 days as of December 31, 2020, to 90.73 days as of December 31, 2024. This signifies that, on average, it took the company longer to sell its inventory over this period.
The gradual increase in DOH may indicate potential inefficiencies in inventory management, as a higher number of days of inventory on hand can tie up capital and increase carrying costs. It could also suggest challenges in accurately forecasting demand or adjusting inventory levels in response to changing market conditions.
It would be essential for Watsco Inc to closely monitor and optimize its inventory levels to strike a balance between meeting customer demand and minimizing the costs associated with excess inventory. This analysis underscores the importance of efficient inventory management practices for maintaining profitability and competitiveness in the market.