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GuruFocus has detected 3 Warning Signs with Tesco PLC \$TSCDY.
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Tesco PLC (OTCPK:TSCDY)
Inventory Turnover
10.09 (As of Aug. 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. Tesco PLC's cost of goods sold for the six months ended in Aug. 2016 was \$34,069 Mil. Tesco PLC's average inventory for the quarter that ended in Aug. 2016 was \$3,377 Mil. Tesco PLC's inventory turnover for the quarter that ended in Aug. 2016 was 10.09.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Tesco PLC's days inventory for the six months ended in Aug. 2016 was 18.09.

Inventory can be measured by Days Sales of Inventory (DSI). Tesco PLC's days sales of inventory (DSI) for the six months ended in Aug. 2016 was 17.20.

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. Tesco PLC's inventory to revenue ratio for the quarter that ended in Aug. 2016 was 0.09.

Definition

Tesco PLC's Inventory Turnover for the fiscal year that ended in Feb. 2016 is calculated as

 Inventory Turnover (A: Feb. 2016 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Feb. 2016 ) / ( (Inventory (A: Feb. 2015 ) + Inventory (A: Feb. 2016 )) / 2 ) = 73684.2857143 / ( (4535.27607362 + 3471.42857143) / 2 ) = 73684.2857143 / 4003.35232252 = 18.41

Tesco PLC's Inventory Turnover for the quarter that ended in Aug. 2016 is calculated as

 Inventory Turnover (Q: Aug. 2016 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Aug. 2016 ) / ( (Inventory (Q: Feb. 2016 ) + Inventory (Q: Aug. 2016 )) / 2 ) = 34069.4626474 / ( (3471.42857143 + 3283.09305374) / 2 ) = 34069.4626474 / 3377.26081258 = 10.09

* 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.

Tesco PLC's Days Inventory for the six months ended in Aug. 2016 is calculated as:

 Days Inventory = Average Inventory (Q: Aug. 2016 ) / Cost of Goods Sold (Q: Aug. 2016 ) * Days in Period = 3377.26081258 / 34069.4626474 * 365 / 2 = 18.09

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

Tesco PLC's Days Sales of Inventory for the six months ended in Aug. 2016 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: Aug. 2016 ) / Revenue (Q: Aug. 2016 ) * Days in Period = 3377.26081258 / 35829.6199214 * 365 / 2 = 17.20

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.

Tesco PLC's Inventory to Revenue for the quarter that ended in Aug. 2016 is calculated as

 Inventory to Revenue = Average Inventory (Q: Aug. 2016 ) / Revenue (Q: Aug. 2016 ) = 3377.26081258 / 35829.6199214 = 0.09

* 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.

Tesco PLC Annual Data

 Feb07 Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Inventory Turnover 24.35 20.04 16.63 20.14 19.06 17.15 15.98 16.83 17.35 18.41

Tesco PLC Semi-Annual Data

 Feb12 Aug12 Feb13 Aug13 Feb14 Aug14 Feb15 Aug15 Feb16 Aug16 Inventory Turnover 7.93 8.03 8.20 7.99 8.56 7.50 9.41 9.29 9.80 10.09
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