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GuruFocus has detected 6 Warning Signs with Conn's Inc \$CONN.
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Conn's Inc (NAS:CONN)
Total Inventories
\$165 Mil (As of Jan. 2017)

Conn's Inc's total inventories for the quarter that ended in Jan. 2017 was \$165 Mil. Conn's Inc's average total inventories from the quarter that ended in Oct. 2016 to the quarter that ended in Jan. 2017 was \$185 Mil.

In Ben Grahams calculation of liquidation value, inventory is only considered worth half of its book value. Conn's Inc's liquidation value for the quarter that ended in Jan. 2017 was \$-739 Mil.

Inventory can be measured by days sales of inventory (DSI). Conn's Inc's days sales of inventory (DSI) for the three months ended in Jan. 2017 was 38.94.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Conn's Inc's days inventory for the three months ended in Jan. 2017 was 77.53.

Inventory turnover measures how fast the company turns over its inventory within a year. Conn's Inc's inventory turnover for the quarter that ended in Jan. 2017 was 1.18.

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. Conn's Inc's inventory to revenue ratio for the quarter that ended in Jan. 2017 was 0.43.

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.

Conn's Inc's liquidation value for the quarter that ended in Jan. 2017 is

 Liquidation value (Q: Jan. 2017 ) = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 23.566 - 1423.344 + 0.75 * 771.448 + 0.5 * 164.856 = -739

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

Conn's Inc's Days Sales of Inventory for the three months ended in Jan. 2017 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) * Days in Period = 184.6965 / 432.805 * 365 / 4 = 38.94

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

Conn's Inc's Days Inventory for the three months ended in Jan. 2017 is calculated as:

 Days Inventory = Average Inventory (Q: Jan. 2017 ) / Cost of Goods Sold (Q: Jan. 2017 ) * Days in Period = 184.6965 / 217.373 * 365 / 4 = 77.53

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

Conn's Inc's Inventory Turnover for the quarter that ended in Jan. 2017 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Jan. 2017 ) / Average Inventory (Q: Jan. 2017 ) = 217.373 / 184.6965 = 1.18

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.

Conn's Inc's Inventory to Revenue for the quarter that ended in Jan. 2017 is calculated as

 Inventory to Revenue = Average Inventory (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) = 184.6965 / 432.805 = 0.43

* 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.

Conn's Inc Annual Data

 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Inventory 81 96 63 82 63 74 121 159 202 165

Conn's Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Inventory 169 159 129 174 238 202 182 192 205 165
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