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Spartech Corporation (NYSE:SEH)
Inventory Turnover
2.50 (As of Oct. 2012)

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. Spartech Corporation's cost of goods sold for the three months ended in Oct. 2012 was \$254 Mil. Spartech Corporation's average inventory for the quarter that ended in Oct. 2012 was \$102 Mil. Spartech Corporation's inventory turnover for the quarter that ended in Oct. 2012 was 2.50.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Spartech Corporation's days inventory for the three months ended in Oct. 2012 was 36.52.

Inventory can be measured by Days Sales of Inventory (DSI). Spartech Corporation's days sales of inventory (DSI) for the three months ended in Oct. 2012 was 32.35.

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. Spartech Corporation's inventory to revenue ratio for the quarter that ended in Oct. 2012 was 0.35.

Definition

Spartech Corporation's Inventory Turnover for the fiscal year that ended in Oct. 2012 is calculated as

 Inventory Turnover (A: Oct. 2012 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Oct. 2012 ) / ( (Inventory (A: Oct. 2011 ) + Inventory (A: Oct. 2012 )) / 2 ) = 1037.991 / ( (91.186 + 105.099) / 2 ) = 1037.991 / 98.1425 = 10.58

Spartech Corporation's Inventory Turnover for the quarter that ended in Oct. 2012 is calculated as

 Inventory Turnover (Q: Oct. 2012 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Oct. 2012 ) / ( (Inventory (Q: Jul. 2012 ) + Inventory (Q: Oct. 2012 )) / 2 ) = 254.067 / ( (98.248 + 105.099) / 2 ) = 254.067 / 101.6735 = 2.50

* 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.

Spartech Corporation's Days Inventory for the three months ended in Oct. 2012 is calculated as:

 Days Inventory = Average Inventory (Q: Oct. 2012 ) / Cost of Goods Sold (Q: Oct. 2012 ) * Days in Period = 101.6735 / 254.067 * 365 / 4 = 36.52

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

Spartech Corporation's Days Sales of Inventory for the three months ended in Oct. 2012 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: Oct. 2012 ) / Revenue (Q: Oct. 2012 ) * Days in Period = 101.6735 / 286.804 * 365 / 4 = 32.35

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.

Spartech Corporation's Inventory to Revenue for the quarter that ended in Oct. 2012 is calculated as

 Inventory to Revenue = Average Inventory (Q: Oct. 2012 ) / Revenue (Q: Oct. 2012 ) = 101.6735 / 286.804 = 0.35

* 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.

Spartech Corporation Annual Data

 Oct03 Oct04 Oct05 Oct06 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Inventory Turnover 8.44 8.00 9.52 10.83 10.81 11.96 10.15 12.82 11.76 10.58

Spartech Corporation Quarterly Data

 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Inventory Turnover 3.03 2.89 2.55 2.69 2.63 2.78 2.69 2.56 2.49 2.50
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