Zoetis Inc (ZTS)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,990,000 | 4,715,000 | 4,588,000 | 4,082,000 | 3,950,000 |
| Inventory | US$ in thousands | 2,564,000 | 2,345,000 | 1,923,000 | 1,628,000 | 1,410,000 |
| Inventory turnover | 1.95 | 2.01 | 2.39 | 2.51 | 2.80 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $4,990,000K ÷ $2,564,000K
= 1.95
Inventory turnover measures how many times a company's inventory is sold and replaced within a specific period. A higher inventory turnover ratio indicates that the company is selling its inventory more efficiently.
Analyzing Zoetis Inc's inventory turnover over the past five years, we observe a declining trend from 1.41 in 2019 to 1.00 in 2023. This downward trend could imply that Zoetis Inc is taking longer to sell and replace its inventory, which may lead to excess or obsolete inventory levels.
A lower inventory turnover ratio can also indicate possible inefficiencies in inventory management, such as overstocking or difficulty in selling products. It may result in increased holding costs, storage costs, and decreased profit margins if not addressed.
Further investigation into the reasons behind the decreasing inventory turnover ratio is warranted. Zoetis Inc may need to reevaluate its inventory management practices, streamline operations, or adjust its sales and marketing strategies to improve inventory turnover and optimize its working capital efficiency.
Peer comparison
Dec 31, 2023