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Family Dollar Stores Inc (NYSE:FDO)
Inventory Turnover
1.07 (As of May. 2015)

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. Family Dollar Stores Inc's cost of goods sold for the three months ended in May. 2015 was \$1,785 Mil. Family Dollar Stores Inc's average inventory for the quarter that ended in May. 2015 was \$1,675 Mil. Family Dollar Stores Inc's inventory turnover for the quarter that ended in May. 2015 was 1.07.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Family Dollar Stores Inc's days inventory for the three months ended in May. 2015 was 85.64.

Inventory can be measured by Days Sales of Inventory (DSI). Family Dollar Stores Inc's days sales of inventory (DSI) for the three months ended in May. 2015 was 56.04.

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. Family Dollar Stores Inc's inventory to revenue ratio for the quarter that ended in May. 2015 was 0.61.

Definition

Family Dollar Stores Inc's Inventory Turnover for the fiscal year that ended in Aug. 2014 is calculated as

 Inventory Turnover (A: Aug. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Aug. 2014 ) / ( (Inventory (A: Aug. 2013 ) + Inventory (A: Aug. 2014 )) / 2 ) = 6958.045 / ( (1467.016 + 1609.932) / 2 ) = 6958.045 / 1538.474 = 4.52

Family Dollar Stores Inc's Inventory Turnover for the quarter that ended in May. 2015 is calculated as

 Inventory Turnover (Q: May. 2015 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: May. 2015 ) / ( (Inventory (Q: Feb. 2015 ) + Inventory (Q: May. 2015 )) / 2 ) = 1785.011 / ( (1718.807 + 1631.925) / 2 ) = 1785.011 / 1675.366 = 1.07

* 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.

Family Dollar Stores Inc's Days Inventory for the three months ended in May. 2015 is calculated as:

 Days Inventory = Average Inventory (Q: May. 2015 ) / Cost of Goods Sold (Q: May. 2015 ) * Days in Period = 1675.366 / 1785.011 * 365 / 4 = 85.64

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

Family Dollar Stores Inc's Days Sales of Inventory for the three months ended in May. 2015 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: May. 2015 ) / Revenue (Q: May. 2015 ) * Days in Period = 1675.366 / 2728.176 * 365 / 4 = 56.04

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.

Family Dollar Stores Inc's Inventory to Revenue for the quarter that ended in May. 2015 is calculated as

 Inventory to Revenue = Average Inventory (Q: May. 2015 ) / Revenue (Q: May. 2015 ) = 1675.366 / 2728.176 = 0.61

* 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.

Family Dollar Stores Inc Annual Data

 Aug05 Aug06 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Inventory Turnover 3.77 4.02 4.29 4.42 4.76 5.00 5.05 4.70 4.73 4.52

Family Dollar Stores Inc Quarterly Data

 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Inventory Turnover 1.23 1.12 1.11 1.06 1.10 1.07 1.09 1.03 1.09 1.07
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