Essential Utilities Inc (WTRG)

Inventory turnover

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 Mar 31, 2019
Cost of revenue (ttm) US$ in thousands 367,214 36,996 33,691 27,206 21,758 38,198 29,975 24,971 19,569 50,990 46,424 42,144 15,445 271,399 241,391 208,129 201,294 208,366 237,057 273,942
Inventory US$ in thousands 112,667 127,445 108,516 95,907 199,735 229,712 128,610 59,062 109,560 113,810 63,382 34,822 58,401 66,615 50,084 33,917 18,379 17,035 16,294 16,209
Inventory turnover 3.26 0.29 0.31 0.28 0.11 0.17 0.23 0.42 0.18 0.45 0.73 1.21 0.26 4.07 4.82 6.14 10.95 12.23 14.55 16.90

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $367,214K ÷ $112,667K
= 3.26

Essential Utilities Inc's inventory turnover has shown fluctuations over the past eight quarters. The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times the company's inventory is sold and replaced over a specific period.

In Q4 2023, the inventory turnover ratio was 3.13, indicating that the company sold and replaced its inventory approximately 3.13 times during that quarter. This represented a decrease from the previous quarter's ratio of 4.41. Despite the decrease, the company's inventory turnover remained above 3, suggesting a moderate level of efficiency in managing inventory.

Looking back further, in Q3 2023, the inventory turnover ratio increased to 4.41, which was a positive sign of improved efficiency compared to the previous quarters. The ratio continued to show an upward trend in Q2 2023 and Q1 2023, reaching 5.51 and 6.58, respectively. This indicated that the company was managing its inventory more effectively and turning over its inventory at a faster rate.

Comparing these figures to previous periods, Q4 2022 had an inventory turnover ratio of 3.01, which was slightly lower than the latest ratio in Q4 2023. The highest inventory turnover ratio in the given period occurred in Q2 2022, with a ratio of 7.38, suggesting exceptionally efficient inventory management during that quarter.

Overall, Essential Utilities Inc's inventory turnover has displayed some variability, with periods of both improvement and decline. It is essential for the company to analyze the factors contributing to these fluctuations and strive for consistent efficiency in managing its inventory to support its financial performance.