Switch to:
GuruFocus has detected 2 Warning Signs with Newfield Exploration Co \$NFX.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Newfield Exploration Co (NYSE:NFX)
Inventory Turnover
7.42 (As of Dec. 2016)

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. Newfield Exploration Co's cost of goods sold for the three months ended in Dec. 2016 was \$141 Mil. Newfield Exploration Co's average inventory for the quarter that ended in Dec. 2016 was \$19 Mil. Newfield Exploration Co's inventory turnover for the quarter that ended in Dec. 2016 was 7.42.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Newfield Exploration Co's days inventory for the three months ended in Dec. 2016 was 12.30.

Inventory can be measured by Days Sales of Inventory (DSI). Newfield Exploration Co's days sales of inventory (DSI) for the three months ended in Dec. 2016 was 4.18.

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. Newfield Exploration Co's inventory to revenue ratio for the quarter that ended in Dec. 2016 was 0.05.

Definition

Newfield Exploration Co's Inventory Turnover for the fiscal year that ended in Dec. 2016 is calculated as

 Inventory Turnover (A: Dec. 2016 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Dec. 2016 ) / ( (Inventory (A: Dec. 2015 ) + Inventory (A: Dec. 2016 )) / 2 ) = 558 / ( (34 + 16) / 2 ) = 558 / 25 = 22.32

Newfield Exploration Co's Inventory Turnover for the quarter that ended in Dec. 2016 is calculated as

 Inventory Turnover (Q: Dec. 2016 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Dec. 2016 ) / ( (Inventory (Q: Sep. 2016 ) + Inventory (Q: Dec. 2016 )) / 2 ) = 141 / ( (22 + 16) / 2 ) = 141 / 19 = 7.42

* 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.

Newfield Exploration Co's Days Inventory for the three months ended in Dec. 2016 is calculated as:

 Days Inventory = Average Inventory (Q: Dec. 2016 ) / Cost of Goods Sold (Q: Dec. 2016 ) * Days in Period = 19 / 141 * 365 / 4 = 12.30

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

Newfield Exploration Co's Days Sales of Inventory for the three months ended in Dec. 2016 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) * Days in Period = 19 / 415 * 365 / 4 = 4.18

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.

Newfield Exploration Co's Inventory to Revenue for the quarter that ended in Dec. 2016 is calculated as

 Inventory to Revenue = Average Inventory (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = 19 / 415 = 0.05

* 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.

Newfield Exploration Co Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Inventory Turnover 0.00 0.00 0.00 0.00 5.04 3.72 3.32 6.08 16.21 22.32

Newfield Exploration Co Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Inventory Turnover 3.16 6.85 4.57 5.46 4.86 3.94 4.12 5.56 7.02 7.42
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)