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.