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GuruFocus has detected 3 Warning Signs with Broadcom Ltd $AVGO.
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Broadcom Ltd (NAS:AVGO)
Inventory Turnover
1.56 (As of Jan. 2017)

Inventory turnover measures how fast the company turns over its inventory within a year. It is calculated as cost of goods sold divided by average inventory. Broadcom Ltd's cost of goods sold for the three months ended in Jan. 2017 was $2,138 Mil. Broadcom Ltd's average inventory for the quarter that ended in Jan. 2017 was $1,368 Mil. Broadcom Ltd's inventory turnover for the quarter that ended in Jan. 2017 was 1.56.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Broadcom Ltd's days inventory for the three months ended in Jan. 2017 was 58.39.

Inventory can be measured by Days Sales of Inventory (DSI). Broadcom Ltd's days sales of inventory (DSI) for the three months ended in Jan. 2017 was 30.16.

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. Broadcom Ltd's inventory to revenue ratio for the quarter that ended in Jan. 2017 was 0.33.


Definition

Broadcom Ltd's Inventory Turnover for the fiscal year that ended in Oct. 2016 is calculated as

Inventory Turnover (A: Oct. 2016 )
=Cost of Goods Sold / Average Inventory
=Cost of Goods Sold (A: Oct. 2016 ) / ((Inventory (A: Oct. 2015 ) + Inventory (A: Oct. 2016 )) / 2 )
=7300 / ((524 + 1400) / 2 )
=7300 / 962
=7.59

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

Inventory Turnover (Q: Jan. 2017 )
=Cost of Goods Sold / Average Inventory
=Cost of Goods Sold (Q: Jan. 2017 ) / ((Inventory (Q: Oct. 2016 ) + Inventory (Q: Jan. 2017 )) / 2 )
=2138 / ((1400 + 1336) / 2 )
=2138 / 1368
=1.56

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

Inventory Turnover measures how fast the company turns over its inventory within a year. A higher inventory turnover means the company has light inventory. Therefore the company spends less money on storage, write downs, and obsolete inventory. If the inventory is too light, it may affect sales because the company may not have enough to meet demand.

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

Broadcom Ltd'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
=1368/2138*365 / 4
=58.39

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

Broadcom Ltd's Days Sales of Inventory for the three months ended in Jan. 2017 is calculated as:

Days Sales of Inventory (DSI)=Average Inventory (Q: Jan. 2017 )/Revenue (Q: Jan. 2017 )*Days in Period
=1368/4139*365 / 4
=30.16

3. 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.

Broadcom Ltd'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 )
=1368 / 4139
=0.33

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Be Aware

Usually retailers pile up their inventories at holiday seasons to meet the stronger demand. Therefore, the inventory of a particular quarter of a year should not be used to calculate inventory turnover. An average inventory is a better indication.


Related Terms

Inventory, Cost of Goods Sold, Days Inventory, Revenue, Inventory to Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Broadcom Ltd Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Inventory Turnover 8.326.375.286.426.216.305.525.956.277.59

Broadcom Ltd Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Inventory Turnover 1.601.591.551.711.641.642.551.451.451.56
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