Assessing industries by inventory over total asset

Study on Industry in India

L. Muh Khaerunnizar

Bachelor of Industrial Engineering

University of Technology Yogyakarta

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What sector is contributing to the growth of India's economy?

(Source: Statista.com)

In 2022, according to statista.com, the finance, real estate and professional services had the highest share in India with 21%. the service sectors made up a large chunk of GVA for the country that year. Manufacturing accounted for the highest within industries, while agriculture stood at around 19 percent that year.

*GVA distribution in India FY 2022, by sector. Article by Manya Rathore on Statista.com, 2023.

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What to discover?

In which industries is inventory important?
In which industries is inventory less important?

To answer this question, we are going to determined it by

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Benchmark by KPI - Inventory / Total Assets

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Real estate holds a high assets in inventory  with median of 45%, and in the 90 percentile, it can hold up to 71% of total assets.
Industrials and materials also hold quite a high inventory, with a median of 19% and 18% of the total asset. On a 90 percentile, it can hold up to 35% and 33% of the total asset, respectively.
Some unique cases happen in the information technology and energy sectors. In the median, it only holds 9% and 4% inventory per total asset. But on the 90 percentile, it holds a high inventory, which can be up to 36% and 34% inventory per total asset, respectively.
Contrary to that, the utilities sector has the lowest percentage of assets in inventory, with a median of 2%. And in the 90 percentiles, it only has 7% assets in inventory.

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What happen?

Real estate holds a high assets in inventory with median of 45%, and in the 90 percentile, it can hold up to 71% of total assets.
Industrials and materials also hold quite a high inventory, with a median of 19% and 18% of the total asset. On a 90 percentile, it can hold up to 35% and 33% of the total asset, respectively.
Some unique cases happen in the information technology and energy sectors. In the median, it only holds 9% and 4% inventory per total asset. But on the 90 percentile, it holds a high inventory, which can be up to 36% and 34% inventory per total asset, respectively.
Contrary to that, the utilities sector has the lowest percentage of assets in inventory, with a median of 2%. And in the 90 percentiles, it only has 7% assets in inventory.

Conclusion

In India, inventory is really important on real estate industry. inventory also important in industrials and materials industry, although it's not as high as real estate.
inventory is less important on utilities industry in India.

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Part 2 of the Project

Inventory Turn & Days

In this part of the project, we are going to focus on five industries that hold a high inventory percentage of total assets, such as real estate, industrials, materials, energy, and information technology.

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Benchmark by KPI - Inventory Days

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Energy has a median of 57 days; in the worst case, it can hold up to 515 days.
The materials industry has a median of 99 days, and in the worst case, it has 222 days of inventory.
Industrials, on the other hand, have, in the best case, 11 days of inventory, with a median of 103 days and the worst case of 383 days. Clearly,  real estate has the highest inventory days with a median of 1,708 days, and the worst case is over 8,680 days.

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Industrial Comparison - Efficiency

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in term of inventory turn over, information technology hold high advantages with 7.53 inventory turn over, followed by energy with 6,45 inventory turn over. but the real estate should pay attention to their inventory because it has very low inventory turn over with only 0.21.

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Industrial Trend - Efficiency

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The energy industry has had the highest inventory days throughout the years, followed by the materials industry. Information technology has the highest cash conversion cycle, and materials have the lowest cash conversion cycle. In terms of median asset turnover, materials have the highest asset turnover over the years, and the energy sector has the lowest. and finally, in return on assets, materials have had the best results over the years. and the worst performance on return on assets was in the real estate industry.

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Assessing industries by inventory over total asset

Assessing industries by inventory over total asset

Primary Modal