West Pharmaceutical Services Inc (WST)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 2,184,400 | 1,750,700 | 1,655,800 | 1,379,100 | 1,234,200 |
| Inventory | US$ in thousands | 434,700 | 414,800 | 378,400 | 321,300 | 235,700 |
| Inventory turnover | 5.03 | 4.22 | 4.38 | 4.29 | 5.24 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $2,184,400K ÷ $434,700K
= 5.03
Inventory turnover is a key ratio used to assess how efficiently a company manages its inventory. In the case of West Pharmaceutical Services, Inc., the inventory turnover has been relatively stable over the past five years. The ratio has ranged from 4.19 to 5.24 during this period.
A higher inventory turnover indicates that the company is selling its inventory more quickly, which is generally positive as it reduces the risk of obsolescence and holding costs. West Pharmaceutical Services, Inc. has shown a decreasing trend in inventory turnover over the past five years, which may indicate that the company is taking longer to sell its inventory.
While a declining inventory turnover can be a concern, it is important to consider the industry norms and specific business operations of West Pharmaceutical Services, Inc. to understand the underlying factors driving this trend. Overall, further analysis of inventory management practices and sales strategies may be necessary to optimize inventory turnover and improve operational efficiency.
Peer comparison
Dec 31, 2023