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Brown-Forman Corp (NYSE:BF.B)
Total Inventories
$971 Mil (As of Oct. 2014)

Brown-Forman Corp's total inventories for the quarter that ended in Oct. 2014 was $971 Mil. Brown-Forman Corp's average total inventories from the quarter that ended in Jul. 2014 to the quarter that ended in Oct. 2014 was $960 Mil.

In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value. Brown-Forman Corp's liquidation value for the quarter that ended in Oct. 2014 was $-877 Mil.

Inventory can be measured by days sales of inventory (DSI). Brown-Forman Corp's days sales of inventory (DSI) for the three months ended in Oct. 2014 was 99.89.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Brown-Forman Corp's days inventory for the three months ended in Oct. 2014 was 326.87.

Inventory turnover measures how fast the company turns over its inventory within a year. Brown-Forman Corp's inventory turnover for the quarter that ended in Oct. 2014 was 0.28.

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. Brown-Forman Corp's inventory to revenue ratio for the quarter that ended in Oct. 2014 was 1.09.


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.

Brown-Forman Corp's liquidation value for the quarter that ended in Oct. 2014 is

Liquidation value (Q: Oct. 2014 )
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Account Receivable)+(0.5 * Inventory)
=235-2168+0.75 * 761+0.5 * 971
=-877

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

Brown-Forman Corp's Days Sales of Inventory for the three months ended in Oct. 2014 is

Days Sales of Inventory (DSI)
=Average Inventory (Q: Oct. 2014 )/Revenue (Q: Oct. 2014 )*Days in Period
=960/877*365 / 4
=99.89

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

Brown-Forman Corp's Days Inventory for the three months ended in Oct. 2014 is calculated as:

Days Inventory=Average Inventory (Q: Oct. 2014 )/Cost of Goods Sold (Q: Oct. 2014 )*Days in Period
=960/268*365 / 4
=326.87

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

Brown-Forman Corp's Inventory Turnover for the quarter that ended in Oct. 2014 is calculated as

Inventory Turnover=Cost of Goods Sold (Q: Oct. 2014 ) / Average Inventory (Q: Oct. 2014 )
=268 / 960
=0.28

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.

Brown-Forman Corp's Inventory to Revenue for the quarter that ended in Oct. 2014 is calculated as

Inventory to Revenue=Average Inventory (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=960 / 877
=1.09

* 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.

Brown-Forman Corp Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
Inventory 470512694685652651647712827882

Brown-Forman Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Inventory 764798802827874901873882949971
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