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Transocean Ltd (NYSE:RIG)
Inventory Turnover
1.65 (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. Transocean Ltd's cost of goods sold for the three months ended in Mar. 2014 was $1,269 Mil. Transocean Ltd's average inventory for the quarter that ended in Mar. 2014 was $768 Mil. Transocean Ltd's inventory turnover for the quarter that ended in Mar. 2014 was 1.65.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Transocean Ltd's days inventory for the three months ended in Mar. 2014 was 55.07.

Inventory can be measured by Days Sales of Inventory (DSI). Transocean Ltd's days sales of inventory (DSI) for the three months ended in Mar. 2014 was 29.88.

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. Transocean Ltd's inventory to revenue ratio for the quarter that ended in Mar. 2014 was 0.33.


Definition

Transocean Ltd's Inventory Turnover for the fiscal year that ended in Dec. 2013 is calculated as

Inventory Turnover (A: Dec. 2013 )=Cost of Goods Sold (A: Dec. 2013 ) / Average Inventory (A: Dec. 2013 )
=5791 / 743
=7.79

Transocean Ltd's Inventory Turnover for the quarter that ended in Mar. 2014 is calculated as

Inventory Turnover (Q: Mar. 2014 )=Cost of Goods Sold (Q: Mar. 2014 ) / Average Inventory (Q: Mar. 2014 )
=1269 / 768
=1.65

* 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.

Transocean Ltd's Days Inventory for the three months ended in Mar. 2014 is calculated as:

Days Inventory=Inventory (Q: Mar. 2014 )/Cost of Goods Sold (Q: Mar. 2014 )*Days in Period
=768/1269*91
=55.07

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

Transocean Ltd's Days Sales of Inventory for the three months ended in Mar. 2014 is calculated as:

Days Sales of Inventory (DSI)=Inventory (Q: Mar. 2014 )/Revenue (Q: Mar. 2014 )*Days in Period
=768/2339*91
=29.88

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.

Transocean Ltd's Inventory to Revenue for the quarter that ended in Mar. 2014 is calculated as

Inventory to Revenue=Inventory (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=768 / 2339
=0.33

* 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

Inventory, Cost of Goods Sold, Days Inventory, Revenue, Inventory to Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Transocean Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Inventory Turnover 11.9311.0313.478.3512.4011.138.1611.6810.017.79

Transocean Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Inventory Turnover 4.281.873.112.212.362.092.052.052.061.65
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