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Aruba Networks Inc (NAS:ARUN)
Inventory to Revenue
0.20 (As of Jan. 2015)

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. Aruba Networks Inc's average inventory for the quarter that ended in Jan. 2015 was \$42.7 Mil. Aruba Networks Inc's revenue for the three months ended in Jan. 2015 was \$212.9 Mil. Aruba Networks Inc's inventory to revenue ratio for the quarter that ended in Jan. 2015 was 0.20.

Aruba Networks Inc's inventory to revenue ratio for the quarter that ended in Jan. 2015 increased from Oct. 2014 (0.19) to Oct. 2014 (0.20)

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. Aruba Networks Inc's days inventory for the three months ended in Jan. 2015 was 64.49.

Inventory can be measured by Days Sales of Inventory (DSI). Aruba Networks Inc's days sales of inventory (DSI) for the three months ended in Jan. 2015 was 18.28.

Inventory turnover measures how fast the company turns over its inventory within a year. Aruba Networks Inc's inventory turnover for the quarter that ended in Jan. 2015 was 1.42.

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.

Aruba Networks Inc's Inventory to Revenue for the fiscal year that ended in Jul. 2014 is calculated as

 Inventory to Revenue (A: Jul. 2014 ) = Average Inventory / Revenue = ( (Inventory (A: Jul. 2013 ) + Inventory (A: Jul. 2014 )) / 2 ) / Revenue (A: Jul. 2014 ) = ( (28.895 + 39.836) / 2 ) / 728.933 = 34.3655 / 728.933 = 0.05

Aruba Networks Inc's Inventory to Revenue for the quarter that ended in Jan. 2015 is calculated as

 Inventory to Revenue (Q: Jan. 2015 ) = Average Inventory / Revenue = ( (Inventory (Q: Oct. 2014 ) + Inventory (Q: Jan. 2015 )) / 2 ) / Revenue (Q: Jan. 2015 ) = ( (40.033 + 45.273) / 2 ) / 212.931 = 42.653 / 212.931 = 0.20

* 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.

Aruba Networks Inc's Days Inventory for the three months ended in Jan. 2015 is calculated as:

 Days Inventory = Average Inventory (Q: Jan. 2015 ) / Cost of Goods Sold (Q: Jan. 2015 ) * Days in Period = 42.653 / 60.356 * 365 / 4 = 64.49

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

Aruba Networks Inc's Days Sales of Inventory for the three months ended in Jan. 2015 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Jan. 2015 ) / Revenue (Q: Jan. 2015 ) * Days in Period = 42.653 / 212.931 * 365 / 4 = 18.28

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

Aruba Networks Inc's Inventory Turnover for the quarter that ended in Jan. 2015 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Jan. 2015 ) / Average Inventory (Q: Jan. 2015 ) = 60.356 / 42.653 = 1.42

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

Related Terms

Historical Data

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

Aruba Networks Inc Annual Data

 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 inventory2rev 0.16 0.07 0.06 0.06 0.05 0.04 0.06 0.05 0.04 0.05

Aruba Networks Inc Quarterly Data

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 inventory2rev 0.17 0.19 0.20 0.19 0.20 0.20 0.20 0.19 0.19 0.20
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