Switch to:
Forest Laboratories Inc (NYSE:FRX)
Inventory Turnover
0.47 (As of Mar. 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. Forest Laboratories Inc's cost of goods sold for the three months ended in Mar. 2014 was \$249 Mil. Forest Laboratories Inc's average inventory for the quarter that ended in Mar. 2014 was \$525 Mil. Forest Laboratories Inc's inventory turnover for the quarter that ended in Mar. 2014 was 0.47.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Forest Laboratories Inc's days inventory for the three months ended in Mar. 2014 was 192.29.

Inventory can be measured by Days Sales of Inventory (DSI). Forest Laboratories Inc's days sales of inventory (DSI) for the three months ended in Mar. 2014 was 43.89.

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. Forest Laboratories Inc's inventory to revenue ratio for the quarter that ended in Mar. 2014 was 0.48.

Definition

Forest Laboratories Inc's Inventory Turnover for the fiscal year that ended in Mar. 2014 is calculated as

 Inventory Turnover (A: Mar. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Mar. 2014 ) / ( (Inventory (A: Mar. 2013 ) + Inventory (A: Mar. 2014 )) / 2 ) = 760.642 / ( (393.901 + 612.664) / 2 ) = 760.642 / 503.2825 = 1.51

Forest Laboratories Inc's Inventory Turnover for the quarter that ended in Mar. 2014 is calculated as

 Inventory Turnover (Q: Mar. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Mar. 2014 ) / ( (Inventory (Q: Dec. 2013 ) + Inventory (Q: Mar. 2014 )) / 2 ) = 249.287 / ( (438.002 + 612.664) / 2 ) = 249.287 / 525.333 = 0.47

* 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.

Forest Laboratories Inc's Days Inventory for the three months ended in Mar. 2014 is calculated as:

 Days Inventory = Average Inventory (Q: Mar. 2014 ) / Cost of Goods Sold (Q: Mar. 2014 ) * Days in Period = 525.333 / 249.287 * 365 / 4 = 192.29

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

Forest Laboratories Inc's Days Sales of Inventory for the three months ended in Mar. 2014 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 ) * Days in Period = 525.333 / 1092.278 * 365 / 4 = 43.89

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.

Forest Laboratories Inc's Inventory to Revenue for the quarter that ended in Mar. 2014 is calculated as

 Inventory to Revenue = Average Inventory (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 ) = 525.333 / 1092.278 = 0.48

* 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.

Forest Laboratories Inc Annual Data

 Mar05 Mar06 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Inventory Turnover 1.12 1.04 1.39 1.86 2.00 2.15 2.10 2.66 1.88 1.51

Forest Laboratories Inc Quarterly Data

 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Inventory Turnover 0.62 0.60 0.57 0.47 0.42 0.46 0.39 0.35 0.39 0.47
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)