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Zale Corp (NYSE:ZLC)
Inventory Turnover
0.35 (As of Jan. 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. Zale Corp's cost of goods sold for the three months ended in Jan. 2014 was \$309 Mil. Zale Corp's average inventory for the quarter that ended in Jan. 2014 was \$884 Mil. Zale Corp's inventory turnover for the quarter that ended in Jan. 2014 was 0.35.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Zale Corp's days inventory for the three months ended in Jan. 2014 was 261.13.

Inventory can be measured by Days Sales of Inventory (DSI). Zale Corp's days sales of inventory (DSI) for the three months ended in Jan. 2014 was 122.85.

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. Zale Corp's inventory to revenue ratio for the quarter that ended in Jan. 2014 was 1.35.

Definition

Zale Corp's Inventory Turnover for the fiscal year that ended in Jul. 2013 is calculated as

 Inventory Turnover (A: Jul. 2013 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (A: Jul. 2013 ) / ( (Inventory (A: Jul. 2012 ) + Inventory (A: Jul. 2013 )) / 2 ) = 903.602 / ( (741.788 + 767.54) / 2 ) = 903.602 / 754.664 = 1.20

Zale Corp's Inventory Turnover for the quarter that ended in Jan. 2014 is calculated as

 Inventory Turnover (Q: Jan. 2014 ) = Cost of Goods Sold / Average Inventory = Cost of Goods Sold (Q: Jan. 2014 ) / ( (Inventory (Q: Oct. 2013 ) + Inventory (Q: Jan. 2014 )) / 2 ) = 308.83 / ( (903.282 + 864.275) / 2 ) = 308.83 / 883.7785 = 0.35

* 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.

Zale Corp's Days Inventory for the three months ended in Jan. 2014 is calculated as:

 Days Inventory = Average Inventory (Q: Jan. 2014 ) / Cost of Goods Sold (Q: Jan. 2014 ) * Days in Period = 883.7785 / 308.83 * 365 / 4 = 261.13

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

Zale Corp's Days Sales of Inventory for the three months ended in Jan. 2014 is calculated as:

 Days Sales of Inventory (DSI) = Average Inventory (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 ) * Days in Period = 883.7785 / 656.449 * 365 / 4 = 122.85

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.

Zale Corp's Inventory to Revenue for the quarter that ended in Jan. 2014 is calculated as

 Inventory to Revenue = Average Inventory (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 ) = 883.7785 / 656.449 = 1.35

* 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.

Zale Corp Annual Data

 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Inventory Turnover 1.39 1.38 1.38 1.23 1.21 1.25 1.11 1.21 1.24 1.20

Zale Corp Quarterly Data

 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Inventory Turnover 0.21 0.39 0.27 0.26 0.20 0.38 0.25 0.25 0.20 0.35
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