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PetSmart Inc (NAS:PETM)
Inventory Turnover
1.49 (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. PetSmart Inc's cost of goods sold for the three months ended in Oct. 2014 was \$1,227 Mil. PetSmart Inc's average inventory for the quarter that ended in Oct. 2014 was \$825 Mil. PetSmart Inc's inventory turnover for the quarter that ended in Oct. 2014 was 1.49.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. PetSmart Inc's days inventory for the three months ended in Oct. 2014 was 61.38.

Inventory can be measured by Days Sales of Inventory (DSI). PetSmart Inc's days sales of inventory (DSI) for the three months ended in Oct. 2014 was 43.31.

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. PetSmart Inc's inventory to revenue ratio for the quarter that ended in Oct. 2014 was 0.47.

Definition

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

 Inventory Turnover (A: Jan. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Jan. 2014 ) / ( (Inventory (A: Jan. 2013 ) + Inventory (A: Jan. 2014 )) / 2 ) = 4800.69 / ( (679.09 + 740.302) / 2 ) = 4800.69 / 709.696 = 6.76

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

 Inventory Turnover (Q: Oct. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Oct. 2014 ) / ( (Inventory (Q: Jul. 2014 ) + Inventory (Q: Oct. 2014 )) / 2 ) = 1226.954 / ( (793.364 + 857.34) / 2 ) = 1226.954 / 825.352 = 1.49

* 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.

PetSmart Inc'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 = 825.352 / 1226.954 * 365 / 4 = 61.38

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

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

 Days Sales of Inventory (DSI) = Average Inventory (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 ) * Days in Period = 825.352 / 1739.117 * 365 / 4 = 43.31

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.

PetSmart Inc'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 ) = 825.352 / 1739.117 = 0.47

* 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.

PetSmart Inc Annual Data

 Jan06 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Inventory Turnover 7.02 6.60 6.55 6.58 6.65 6.85 6.84 7.09 6.76 6.53

PetSmart Inc Quarterly Data

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Inventory Turnover 1.57 1.78 1.67 1.58 1.52 1.61 1.56 1.53 1.49 1.61
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