Analysis of Inventory
Inventory Disclosure
Fortinet Inc., balance sheet: inventory
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
Total inventory levels exhibited a consistent and accelerating upward trend between 2018 and 2022, increasing from 90,000 thousand US dollars to 264,600 thousand US dollars. This represents a nearly threefold increase over the five-year period, with the most significant surge occurring between 2021 and 2022, where inventory grew by approximately 50% in a single fiscal year.
- Finished Goods Trends
- Finished goods constitute the largest portion of the total inventory throughout the analyzed period. This category grew from 76,700 thousand US dollars in 2018 to 206,300 thousand US dollars in 2022. While growth was steady through 2020, a period of stagnation occurred in 2021, followed by a substantial increase of approximately 64% in 2022, indicating a significant buildup of completed products ready for shipment.
- Raw Materials Analysis
- Raw materials showed a volatile but overall increasing trajectory. Following a slight decline in 2019, values rose sharply from 13,800 thousand US dollars in 2020 to 40,200 thousand US dollars in 2021, eventually reaching 46,300 thousand US dollars by the end of 2022. This rapid increase starting in 2021 suggests a strategic shift toward higher safety stocks of raw components.
- Work in Process Observations
- Work in process values were not reported from 2018 through 2020. This category emerged in 2021 at 9,800 thousand US dollars and increased to 12,000 thousand US dollars in 2022. The introduction of this line item suggests either a change in accounting disclosure granularity or an expansion in the internal manufacturing pipeline.
- Inventory Composition Shift
- The composition of inventory has evolved over the period. In 2018, finished goods accounted for approximately 85% of total inventory. By 2022, although finished goods remained the primary component, their share decreased to approximately 78%, while the relative proportion of raw materials and work in process increased. This indicates a broader distribution of capital across different stages of the production cycle.
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