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Walgreen Co (NYSE:WAG)
Inventory Turnover
2.05 (As of May. 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. Walgreen Co's cost of goods sold for the three months ended in May. 2014 was $13,961 Mil. Walgreen Co's average inventory for the quarter that ended in May. 2014 was $6,826 Mil. Walgreen Co's inventory turnover for the quarter that ended in May. 2014 was 2.05.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Walgreen Co's days inventory for the three months ended in May. 2014 was 44.49.

Inventory can be measured by Days Sales of Inventory (DSI). Walgreen Co's days sales of inventory (DSI) for the three months ended in May. 2014 was 32.02.

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. Walgreen Co's inventory to revenue ratio for the quarter that ended in May. 2014 was 0.35.


Definition

Walgreen Co's Inventory Turnover for the fiscal year that ended in Aug. 2013 is calculated as

Inventory Turnover (A: Aug. 2013 )
=Cost of Goods Sold (A: Aug. 2013 )/( (Inventory (A: Aug. 2012 )+Inventory (A: Aug. 2013 ))/ 2 )
=51098/( (7036+6852)/ 2 )
=51098/6944
=7.36

Walgreen Co's Inventory Turnover for the quarter that ended in May. 2014 is calculated as

Inventory Turnover (Q: May. 2014 )
=Cost of Goods Sold (Q: May. 2014 )/( (Inventory (Q: Feb. 2014 )+Inventory (Q: May. 2014 ))/ 2 )
=13961/( (7213+6439)/ 2 )
=13961/6826
=2.05

* 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.

Walgreen Co's Days Inventory for the three months ended in May. 2014 is calculated as:

Days Inventory=Average Inventory (Q: May. 2014 )/Cost of Goods Sold (Q: May. 2014 )*Days in Period
=6826/13961*91
=44.49

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

Walgreen Co's Days Sales of Inventory for the three months ended in May. 2014 is calculated as:

Days Sales of Inventory=Average Inventory (Q: May. 2014 )/Revenue (Q: May. 2014 )*Days in Period
=6826/19401*91
=32.02

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.

Walgreen Co's Inventory to Revenue for the quarter that ended in May. 2014 is calculated as

Inventory to Revenue=Average Inventory (Q: May. 2014 ) / Revenue (Q: May. 2014 )
=6826 / 19401
=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

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.

Walgreen Co Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
Inventory Turnover 6.115.895.886.006.046.516.846.706.807.36

Walgreen Co Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Inventory Turnover 1.701.781.741.641.731.851.861.811.872.05
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