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Cato Corp (NYSE:CATO)
Inventory Turnover
1.12 (As of Oct. 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. Cato Corp's cost of goods sold for the three months ended in Oct. 2014 was $136.5 Mil. Cato Corp's average inventory for the quarter that ended in Oct. 2014 was $121.9 Mil. Cato Corp's inventory turnover for the quarter that ended in Oct. 2014 was 1.12.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Cato Corp's days inventory for the three months ended in Oct. 2014 was 81.50.

Inventory can be measured by Days Sales of Inventory (DSI). Cato Corp's days sales of inventory (DSI) for the three months ended in Oct. 2014 was 51.50.

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. Cato Corp's inventory to revenue ratio for the quarter that ended in Oct. 2014 was 0.56.


Definition

Cato Corp's Inventory Turnover for the fiscal year that ended in Jan. 2014 is calculated as

Inventory Turnover (A: Jan. 2014 )
=Cost of Goods Sold (A: Jan. 2014 )/( (Inventory (A: Jan. 2013 )+Inventory (A: Jan. 2014 ))/ 2 )
=571.246/( (140.738+150.861)/ 2 )
=571.246/145.7995
=3.92

Cato Corp's Inventory Turnover for the quarter that ended in Oct. 2014 is calculated as

Inventory Turnover (Q: Oct. 2014 )
=Cost of Goods Sold (Q: Oct. 2014 )/( (Inventory (Q: Jul. 2014 )+Inventory (Q: Oct. 2014 ))/ 2 )
=136.495/( (116.026+127.786)/ 2 )
=136.495/121.906
=1.12

* 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.

Cato Corp's Days Inventory for the three months ended in Oct. 2014 is calculated as:

Days Inventory=Average Inventory (Q: Oct. 2014 )/Cost of Goods Sold (Q: Oct. 2014 )*Days in Period
=121.906/136.495*365 / 4
=81.50

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

Cato Corp's Days Sales of Inventory for the three months ended in Oct. 2014 is calculated as:

Days Sales of Inventory=Average Inventory (Q: Oct. 2014 )/Revenue (Q: Oct. 2014 )*Days in Period
=121.906/216.01*365 / 4
=51.50

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.

Cato Corp's Inventory to Revenue for the quarter that ended in Oct. 2014 is calculated as

Inventory to Revenue=Average Inventory (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=121.906 / 216.01
=0.56

* 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

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 own currency.

Cato Corp Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Inventory Turnover 5.355.365.224.884.874.784.514.384.293.92

Cato Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Inventory Turnover 1.251.101.111.181.221.061.001.171.211.12
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