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Spartech Corporation (NYSE:SEH)
Total Inventories
\$105 Mil (As of Oct. 2012)

Spartech Corporation's total inventories for the quarter that ended in Oct. 2012 was \$105 Mil. Spartech Corporation's average total inventories from the quarter that ended in Jul. 2012 to the quarter that ended in Oct. 2012 was \$102 Mil.

In Ben Grahams calculation of liquidation value, inventory is only considered worth half of its book value. Spartech Corporation's liquidation value for the quarter that ended in Oct. 2012 was \$-198 Mil.

Inventory can be measured by days sales of inventory (DSI). Spartech Corporation's days sales of inventory (DSI) for the three months ended in Oct. 2012 was 32.35.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Spartech Corporation's days inventory for the three months ended in Oct. 2012 was 36.52.

Inventory turnover measures how fast the company turns over its inventory within a year. Spartech Corporation's inventory turnover for the quarter that ended in Oct. 2012 was 2.50.

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. Spartech Corporation's inventory to revenue ratio for the quarter that ended in Oct. 2012 was 0.35.

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.

Spartech Corporation's liquidation value for the quarter that ended in Oct. 2012 is

 Liquidation value (Q: Oct. 2012 ) = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 1.092 - 364.648 + 0.75 * 150.566 + 0.5 * 105.099 = -198

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

Spartech Corporation's Days Sales of Inventory for the three months ended in Oct. 2012 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Oct. 2012 ) / Revenue (Q: Oct. 2012 ) * Days in Period = 101.6735 / 286.804 * 365 / 4 = 32.35

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

Spartech Corporation's Days Inventory for the three months ended in Oct. 2012 is calculated as:

 Days Inventory = Average Inventory (Q: Oct. 2012 ) / Cost of Goods Sold (Q: Oct. 2012 ) * Days in Period = 101.6735 / 254.067 * 365 / 4 = 36.52

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

Spartech Corporation's Inventory Turnover for the quarter that ended in Oct. 2012 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Oct. 2012 ) / Average Inventory (Q: Oct. 2012 ) = 254.067 / 101.6735 = 2.50

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.

Spartech Corporation's Inventory to Revenue for the quarter that ended in Oct. 2012 is calculated as

 Inventory to Revenue = Average Inventory (Q: Oct. 2012 ) / Revenue (Q: Oct. 2012 ) = 101.6735 / 286.804 = 0.35

* 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

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Spartech Corporation Annual Data

 Oct03 Oct04 Oct05 Oct06 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Inventory 100 142 119 122 116 97 63 80 91 105

Spartech Corporation Quarterly Data

 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Inventory 84 80 90 100 102 91 102 107 98 105
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