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Babcock & Wilcox Co (NYSE:BWC)
Inventory Turnover
7.46 (As of Dec. 2014)

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. Babcock & Wilcox Co's cost of goods sold for the three months ended in Dec. 2014 was \$840 Mil. Babcock & Wilcox Co's average inventory for the quarter that ended in Dec. 2014 was \$113 Mil. Babcock & Wilcox Co's inventory turnover for the quarter that ended in Dec. 2014 was 7.46.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Babcock & Wilcox Co's days inventory for the three months ended in Dec. 2014 was 12.23.

Inventory can be measured by Days Sales of Inventory (DSI). Babcock & Wilcox Co's days sales of inventory (DSI) for the three months ended in Dec. 2014 was 12.27.

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. Babcock & Wilcox Co's inventory to revenue ratio for the quarter that ended in Dec. 2014 was 0.13.

Definition

Babcock & Wilcox Co's Inventory Turnover for the fiscal year that ended in Dec. 2014 is calculated as

 Inventory Turnover (A: Dec. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Dec. 2014 ) / ( (Inventory (A: Dec. 2013 ) + Inventory (A: Dec. 2014 )) / 2 ) = 2409.376 / ( (113.058 + 108.637) / 2 ) = 2409.376 / 110.8475 = 21.74

Babcock & Wilcox Co's Inventory Turnover for the quarter that ended in Dec. 2014 is calculated as

 Inventory Turnover (Q: Dec. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Dec. 2014 ) / ( (Inventory (Q: Sep. 2014 ) + Inventory (Q: Dec. 2014 )) / 2 ) = 840.147 / ( (116.533 + 108.637) / 2 ) = 840.147 / 112.585 = 7.46

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

Babcock & Wilcox Co's Days Inventory for the three months ended in Dec. 2014 is calculated as:

 Days Inventory = Average Inventory (Q: Dec. 2014 ) / Cost of Goods Sold (Q: Dec. 2014 ) * Days in Period = 112.585 / 840.147 * 365 / 4 = 12.23

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

Babcock & Wilcox Co's Days Sales of Inventory for the three months ended in Dec. 2014 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 ) * Days in Period = 112.585 / 837.094 * 365 / 4 = 12.27

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.

Babcock & Wilcox Co's Inventory to Revenue for the quarter that ended in Dec. 2014 is calculated as

 Inventory to Revenue = Average Inventory (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 ) = 112.585 / 837.094 = 0.13

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

Babcock & Wilcox Co Annual Data

 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Inventory Turnover 0.00 0.00 0.00 0.00 19.47 20.37 22.90 21.26 19.40 21.74

Babcock & Wilcox Co Quarterly Data

 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Inventory Turnover 4.88 5.26 5.14 6.00 5.13 3.68 4.51 4.60 4.83 7.46
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