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Inventory Turnover
1.87 (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. Best Buy Co Inc's cost of goods sold for the three months ended in Jan. 2017 was \$10,452 Mil. Best Buy Co Inc's average inventory for the quarter that ended in Jan. 2017 was \$5,598 Mil. Best Buy Co Inc's inventory turnover for the quarter that ended in Jan. 2017 was 1.87.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Best Buy Co Inc's days inventory for the three months ended in Jan. 2017 was 48.87.

Inventory can be measured by Days Sales of Inventory (DSI). Best Buy Co Inc's days sales of inventory (DSI) for the three months ended in Jan. 2017 was 37.89.

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. Best Buy Co Inc's inventory to revenue ratio for the quarter that ended in Jan. 2017 was 0.42.

Definition

Best Buy Co Inc's Inventory Turnover for the fiscal year that ended in Jan. 2017 is calculated as

 Inventory Turnover (A: Jan. 2017 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Jan. 2017 ) / ( (Inventory (A: Jan. 2016 ) + Inventory (A: Jan. 2017 )) / 2 ) = 29963 / ( (5051 + 4864) / 2 ) = 29963 / 4957.5 = 6.04

Best Buy Co Inc'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 ) = 10452 / ( (6331 + 4864) / 2 ) = 10452 / 5597.5 = 1.87

* 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.

Best Buy Co 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 = 5597.5 / 10452 * 365 / 4 = 48.87

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

Best Buy Co Inc'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 = 5597.5 / 13482 * 365 / 4 = 37.89

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.

Best Buy Co 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 ) = 5597.5 / 13482 = 0.42

* 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

Historical Data

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

Best Buy Co Inc Annual Data

 Feb08 Feb09 Feb10 Feb11 Feb12 Jan13 Jan14 Jan15 Jan16 Jan17 Inventory Turnover 6.98 7.19 7.27 6.54 5.93 4.75 5.23 5.93 5.93 6.04

Best Buy Co Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Inventory Turnover 1.11 1.85 1.29 1.30 1.15 1.82 1.29 1.34 1.20 1.87
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