Switch to:
Applied Materials Inc (NAS:AMAT)
Inventory to Revenue
0.69 (As of Jul. 2014)

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. Applied Materials Inc's average inventory for the quarter that ended in Jul. 2014 was $1,556 Mil. Applied Materials Inc's revenue for the three months ended in Jul. 2014 was $2,265 Mil. Applied Materials Inc's inventory to revenue ratio for the quarter that ended in Jul. 2014 was 0.69.

Applied Materials Inc's inventory to revenue ratio for the quarter that ended in Jul. 2014 increased from Apr. 2014 (0.66) to Apr. 2014 (0.69)

An increase in inventory to revenue ratio from one quarter to the next indicates that one of the following is happening:

1. investment in inventory is growing more rapidly than revenue
2. revenue are dropping
No matter which situation is causing the problem, an increase in the inventory to revenue ratio may signal an oncoming cash flow problem.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Applied Materials Inc's days inventory for the three months ended in Jul. 2014 was 111.19.

Inventory can be measured by Days Sales of Inventory (DSI). Applied Materials Inc's days sales of inventory (DSI) for the three months ended in Jul. 2014 was 62.49.

Inventory turnover measures how fast the company turns over its inventory within a year. Applied Materials Inc's inventory turnover for the quarter that ended in Jul. 2014 was 0.82.


Definition

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.

Applied Materials Inc's Inventory to Revenue for the fiscal year that ended in Oct. 2013 is calculated as

Inventory to Revenue
=( (Inventory (A: Oct. 2012 )+Inventory (A: Oct. 2013 ))/ 2 )/Revenue (A: Oct. 2013 )
=( (1272+1413)/ 2 )/7509
=1342.5/7509
=0.18

Applied Materials Inc's Inventory to Revenue for the quarter that ended in Jul. 2014 is calculated as

Inventory to Revenue
=( (Inventory (Q: Apr. 2014 )+Inventory (Q: Jul. 2014 ))/ 2 )/Revenue (Q: Jul. 2014 )
=( (1564+1547)/ 2 )/2265
=1555.5/2265
=0.69

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


Explanation

An increase in inventory to revenue ratio from one quarter to the next indicates that one of the following is happening:

1. investment in inventory is growing more rapidly than revenue
2. revenue are dropping
No matter which situation is causing the problem, an increase in the inventory to revenue ratio may signal an oncoming cash flow problem.

Likewise, a decrease in the inventory to revenue ratio from one quarter to next indicates that one of these is occurring:

1. investment in inventory is shrinking in relation to revenue
2. revenue are increasing
No matter which situation is causing the reduction in the inventory to revenue ratio, either one suggests that business's inventory levels and its cash flow are effectively managed.

More Related Terms:

1. Days Inventory indicates the number of days of goods in sales that a company has in the inventory.

Applied Materials Inc's Days Inventory for the three months ended in Jul. 2014 is calculated as:

Days Inventory=Average Inventory (Q: Jul. 2014 )/Cost of Goods Sold (Q: Jul. 2014 )*Days in Period
=1555.5/1273*91
=111.19

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

Applied Materials Inc's Days Sales of Inventory for the three months ended in Jul. 2014 is

Days Sales of Inventory (DSI)=Average Inventory (Q: Jul. 2014 )/Revenue (Q: Jul. 2014 )*Days in Period
=1555.5/2265*91
=62.49

3. Inventory Turnover measures how fast the company turns over its inventory within a year.

Applied Materials Inc's Inventory Turnover for the quarter that ended in Jul. 2014 is calculated as

Inventory Turnover=Cost of Goods Sold (Q: Jul. 2014 ) / Average Inventory (Q: Jul. 2014 )
=1273 / 1555.5
=0.82

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


Related Terms

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


Historical Data

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

Applied Materials Inc Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
inventory2rev 0.130.160.130.140.200.360.170.150.170.18

Applied Materials Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
inventory2rev 0.660.640.810.810.660.680.700.670.660.69
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK