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Apache Corporation (NYSE:APA)
Total Inventories
$666 Mil (As of Mar. 2015)

Apache Corporation's total inventories for the quarter that ended in Mar. 2015 was $666 Mil. Apache Corporation's average total inventories from the quarter that ended in Dec. 2014 to the quarter that ended in Mar. 2015 was $687 Mil.

In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value. Apache Corporation's liquidation value for the quarter that ended in Mar. 2015 was $-25,552 Mil.

Inventory can be measured by days sales of inventory (DSI). Apache Corporation's days sales of inventory (DSI) for the three months ended in Mar. 2015 was 34.48.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Apache Corporation's days inventory for the three months ended in Mar. 2015 was 1,119.44.

Inventory turnover measures how fast the company turns over its inventory within a year. Apache Corporation's inventory turnover for the quarter that ended in Mar. 2015 was 0.08.

Inventory to revenue ratio determines the ability of a company to manage their inventory levels. It measures the percentage of Inventories the company currently has on hand to support the current amount of Revenue. Apache Corporation's inventory to revenue ratio for the quarter that ended in Mar. 2015 was 0.38.


Definition

Total Inventories includes the raw materials, work-in-process goods and completely finished goods of a company. It is a portion of a company’s current assets.


Explanation

Inventory control is an important part of business operation. If a company does not have enough inventory, it may not be able to meet customers’ required delivery time. If it has too much inventory, the cost of holding the inventory can be high.

1. In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value.

Apache Corporation's liquidation value for the quarter that ended in Mar. 2015 is

Liquidation value (Q: Mar. 2015 )
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Account Receivable)+(0.5 * Inventory)
=229-27439+0.75 * 1767+0.5 * 666
=-25,552

2. Inventory can be measured by Days Sales of Inventory (DSI).

Apache Corporation's Days Sales of Inventory for the three months ended in Mar. 2015 is

Days Sales of Inventory (DSI)
=Average Inventory (Q: Mar. 2015 )/Revenue (Q: Mar. 2015 )*Days in Period
=687/1818*365 / 4
=34.48

3. Days Inventory indicates the number of days of goods in sales that a company has in the inventory.

Apache Corporation's Days Inventory for the three months ended in Mar. 2015 is calculated as:

Days Inventory=Average Inventory (Q: Mar. 2015 )/Cost of Goods Sold (Q: Mar. 2015 )*Days in Period
=687/56*365 / 4
=1,119.44

4. Inventory Turnover measures how fast the company turns over its inventory within a year.

Apache Corporation's Inventory Turnover for the quarter that ended in Mar. 2015 is calculated as

Inventory Turnover=Cost of Goods Sold (Q: Mar. 2015 ) / Average Inventory (Q: Mar. 2015 )
=56 / 687
=0.08

5. Inventory to Revenue determines the ability of a company to manage their inventory levels. It measures the percentage of Inventories the company currently has on hand to support the current amount of Revenue.

Apache Corporation's Inventory to Revenue for the quarter that ended in Mar. 2015 is calculated as

Inventory to Revenue=Average Inventory (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 )
=687 / 1818
=0.38

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Be Aware

Manufacturers with durable competitive advantages have the advantage that the products they sell do not change, and therefore will never become obsolete. Buffett likes this advantage.

When identifying manufacturers with durable competitive advantage, look for inventory and net earnings that rise correspondingly. This indicates that the company is finding profitable ways to increase sales which called for an increase in inventory.

Manufacturers with inventories that spike up and down are indicative of competitive industries subject to boom and bust.


Related Terms

Revenue, Cash and Cash Equivalents, Total Liabilities, Account Receivable, Inventory, NCAV, Days Inventory, Cost of Goods Sold, Inventory Turnover, Inventory to Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Apache Corporation Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Inventory 210320461499533564655908891708

Apache Corporation Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Inventory 908885973889891727794713708666
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