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Hormel Foods Corp (NYSE:HRL)
Inventory Turnover
1.78 (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. Hormel Foods Corp's cost of goods sold for the three months ended in Jan. 2017 was \$1,728 Mil. Hormel Foods Corp's average inventory for the quarter that ended in Jan. 2017 was \$972 Mil. Hormel Foods Corp's inventory turnover for the quarter that ended in Jan. 2017 was 1.78.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Hormel Foods Corp's days inventory for the three months ended in Jan. 2017 was 51.32.

Inventory can be measured by Days Sales of Inventory (DSI). Hormel Foods Corp's days sales of inventory (DSI) for the three months ended in Jan. 2017 was 38.89.

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. Hormel Foods Corp's inventory to revenue ratio for the quarter that ended in Jan. 2017 was 0.43.

Definition

Hormel Foods Corp's Inventory Turnover for the fiscal year that ended in Oct. 2016 is calculated as

 Inventory Turnover (A: Oct. 2016 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Oct. 2016 ) / ( (Inventory (A: Oct. 2015 ) + Inventory (A: Oct. 2016 )) / 2 ) = 7365.049 / ( (993.265 + 985.683) / 2 ) = 7365.049 / 989.474 = 7.44

Hormel Foods Corp'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 ) = 1727.947 / ( (985.683 + 958.13) / 2 ) = 1727.947 / 971.9065 = 1.78

* 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.

Hormel Foods Corp'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 = 971.9065 / 1727.947 * 365 / 4 = 51.32

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

Hormel Foods Corp'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 = 971.9065 / 2280.227 * 365 / 4 = 38.89

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.

Hormel Foods Corp'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 ) = 971.9065 / 2280.227 = 0.43

* 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.

Hormel Foods Corp Annual Data

 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16 Inventory Turnover 8.52 7.95 7.21 7.89 7.81 7.51 7.65 7.66 7.28 7.44

Hormel Foods Corp Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Inventory Turnover 1.99 1.88 1.84 1.83 1.93 1.75 1.75 1.77 2.01 1.78
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