Xpel Inc (XPEL)
Days of inventory on hand (DOH)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Inventory turnover | 3.14 | 3.41 | 4.27 | 6.10 | 7.51 | |
| DOH | days | 116.26 | 107.16 | 85.53 | 59.80 | 48.61 |
December 31, 2023 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 3.14
= 116.26
The days of inventory on hand (DOH) for XPEL Inc have shown an increasing trend over the past five years, indicating a lengthening time it takes to convert inventory into sales. In 2019, the company held inventory for an average of 63.94 days, which then increased to 77.82 days in 2020, 113.79 days in 2021, 149.68 days in 2022, and most recently peaked at 166.22 days in 2023.
This escalating trend in DOH suggests that XPEL Inc may be experiencing challenges in efficiently managing its inventory levels. Higher DOH values can indicate potential inefficiencies in inventory management, such as overstocking or slow-moving inventory. It may also point towards difficulties in accurately forecasting demand, leading to an excess accumulation of inventory.
The company should consider implementing strategies to optimize inventory management, such as improving demand forecasting accuracy, reducing excess inventory levels, and enhancing supply chain efficiencies. Addressing these issues could help XPEL Inc reduce its DOH figure, improve cash flow by reducing inventory carrying costs, and potentially enhance profitability through better inventory turnover.