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GuruFocus has detected 3 Warning Signs with bebe stores Inc \$BEBE.
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bebe stores Inc (NAS:BEBE)
Total Inventories
\$23.3 Mil (As of Dec. 2016)

bebe stores Inc's total inventories for the quarter that ended in Dec. 2016 was \$23.3 Mil. bebe stores Inc's average total inventories from the quarter that ended in Sep. 2016 to the quarter that ended in Dec. 2016 was \$25.8 Mil.

In Ben Grahams calculation of liquidation value, inventory is only considered worth half of its book value. bebe stores Inc's liquidation value for the quarter that ended in Dec. 2016 was \$31.6 Mil.

Inventory can be measured by days sales of inventory (DSI). bebe stores Inc's days sales of inventory (DSI) for the three months ended in Dec. 2016 was 23.08.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. bebe stores Inc's days inventory for the three months ended in Dec. 2016 was 35.17.

Inventory turnover measures how fast the company turns over its inventory within a year. bebe stores Inc's inventory turnover for the quarter that ended in Dec. 2016 was 2.59.

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. bebe stores Inc's inventory to revenue ratio for the quarter that ended in Dec. 2016 was 0.25.

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.

bebe stores Inc's liquidation value for the quarter that ended in Dec. 2016 is

 Liquidation value (Q: Dec. 2016 ) = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 66.792 - 53.077 + 0.75 * 8.411 + 0.5 * 23.25 = 31.6

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

bebe stores Inc's Days Sales of Inventory for the three months ended in Dec. 2016 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) * Days in Period = 25.7855 / 101.931 * 365 / 4 = 23.08

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

bebe stores Inc's Days Inventory for the three months ended in Dec. 2016 is calculated as:

 Days Inventory = Average Inventory (Q: Dec. 2016 ) / Cost of Goods Sold (Q: Dec. 2016 ) * Days in Period = 25.7855 / 66.903 * 365 / 4 = 35.17

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

bebe stores Inc's Inventory Turnover for the quarter that ended in Dec. 2016 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Dec. 2016 ) / Average Inventory (Q: Dec. 2016 ) = 66.903 / 25.7855 = 2.59

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.

bebe stores Inc's Inventory to Revenue for the quarter that ended in Dec. 2016 is calculated as

 Inventory to Revenue = Average Inventory (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = 25.7855 / 101.931 = 0.25

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

bebe stores Inc Annual Data

 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Inventory 44.1 42.8 39.2 33.5 33.4 33.3 33.9 31.7 31.3 28.7

bebe stores Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Inventory 34.7 30.1 32.6 31.3 34.9 28.3 31.7 28.7 28.3 23.3
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