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NRG Energy Inc (NYSE:NRG)
Inventory
$1,051 Mil (As of Sep. 2014)

NRG Energy Inc's inventory for the quarter that ended in Sep. 2014 was $1,051 Mil.

In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value. NRG Energy Inc's liquidation value for the quarter that ended in Sep. 2014 was $-26,484 Mil.

Inventory turnover measures how fast the company turns over its inventory within a year. NRG Energy Inc's inventory turnover for the quarter that ended in Sep. 2014 was 3.20.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. NRG Energy Inc's days inventory for the three months ended in Sep. 2014 was 28.49.

Inventory can be measured by days sales of inventory (DSI). NRG Energy Inc's days sales of inventory (DSI) for the three months ended in Sep. 2014 was 20.44.

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. NRG Energy Inc's inventory to revenue ratio for the quarter that ended in Sep. 2014 was 0.22.


Definition

Inventory 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.

NRG Energy Inc's liquidation value for the quarter that ended in Sep. 2014 is

Liquidation value (Q: Sep. 2014 )
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Accts Receivable)+(0.5 * Inventory)
=1956-30131+0.75 * 1554+0.5 * 1051
=-26,484

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

NRG Energy Inc's Inventory Turnover for the quarter that ended in Sep. 2014 is calculated as

Inventory Turnover (Q: Sep. 2014 )
=Cost of Goods Sold (Q: Sep. 2014 )/( (Inventory (Q: Jun. 2014 )+Inventory (Q: Sep. 2014 ))/ 2 )
=3278/( (996+1051)/ 2 )
=3278/1023.5
=3.20

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

NRG Energy Inc's Days Inventory for the three months ended in Sep. 2014 is calculated as:

Days Inventory=Average Inventory (Q: Sep. 2014 )/Cost of Goods Sold (Q: Sep. 2014 )*Days in Period
=1023.5/3278*365 / 4
=28.49

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

NRG Energy Inc's Days Sales of Inventory for the three months ended in Sep. 2014 is

Days Sales of Inventory (DSI)
=Average Inventory (Q: Sep. 2014 )/Revenue (Q: Sep. 2014 )*Days in Period
=1023.5/4569*365 / 4
=20.44

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.

NRG Energy Inc's Inventory to Revenue for the quarter that ended in Sep. 2014 is calculated as

Inventory to Revenue=Average Inventory (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=1023.5 / 4569
=0.22

* 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.

NRG Energy Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Inventory 248260421451455541453308931898

NRG Energy Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Inventory 4163939319048748618987819961,051
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