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Diamond Foods Inc (NAS:DMND)
Total Inventories
$259.2 Mil (As of Oct. 2014)

Diamond Foods Inc's total inventories for the quarter that ended in Oct. 2014 was $259.2 Mil. Diamond Foods Inc's average total inventories from the quarter that ended in Jul. 2014 to the quarter that ended in Oct. 2014 was $191.7 Mil.

In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value. Diamond Foods Inc's liquidation value for the quarter that ended in Oct. 2014 was $-827.7 Mil.

Inventory can be measured by days sales of inventory (DSI). Diamond Foods Inc's days sales of inventory (DSI) for the three months ended in Oct. 2014 was 70.94.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Diamond Foods Inc's days inventory for the three months ended in Oct. 2014 was 93.44.

Inventory turnover measures how fast the company turns over its inventory within a year. Diamond Foods Inc's inventory turnover for the quarter that ended in Oct. 2014 was 0.98.

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. Diamond Foods Inc's inventory to revenue ratio for the quarter that ended in Oct. 2014 was 0.78.


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.

Diamond Foods Inc'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)
=11.068-1057.822+0.75 * 119.326+0.5 * 259.171
=-827.7

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

Diamond Foods Inc'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
=191.722/246.621*365 / 4
=70.94

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

Diamond Foods Inc'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
=191.722/187.231*365 / 4
=93.44

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

Diamond Foods Inc'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 )
=187.231 / 191.722
=0.98

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.

Diamond Foods Inc'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 )
=191.722 / 246.621
=0.78

* 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.

Diamond Foods Inc Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
Inventory 111.399.290.688.585.0143.4145.6165.7115.5124.3

Diamond Foods Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Inventory 165.7232.0182.1150.7115.5208.0176.0162.8124.3259.2
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