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Forest Laboratories Inc (NYSE:FRX)
Inventory to Revenue
0.48 (As of Mar. 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. Forest Laboratories Inc's average inventory for the quarter that ended in Mar. 2014 was \$525 Mil. Forest Laboratories Inc's revenue for the three months ended in Mar. 2014 was \$1,092 Mil. Forest Laboratories Inc's inventory to revenue ratio for the quarter that ended in Mar. 2014 was 0.48.

Forest Laboratories Inc's inventory to revenue ratio for the quarter that ended in Mar. 2014 declined from Dec. 2013 (0.53) to Dec. 2013 (0.48)

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.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Forest Laboratories Inc's days inventory for the three months ended in Mar. 2014 was 192.29.

Inventory can be measured by Days Sales of Inventory (DSI). Forest Laboratories Inc's days sales of inventory (DSI) for the three months ended in Mar. 2014 was 43.89.

Inventory turnover measures how fast the company turns over its inventory within a year. Forest Laboratories Inc's inventory turnover for the quarter that ended in Mar. 2014 was 0.47.

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.

Forest Laboratories Inc's Inventory to Revenue for the fiscal year that ended in Mar. 2014 is calculated as

 Inventory to Revenue (A: Mar. 2014 ) = Average Inventory / Revenue = ( (Inventory (A: Mar. 2013 ) + Inventory (A: Mar. 2014 )) / 2 ) / Revenue (A: Mar. 2014 ) = ( (393.901 + 612.664) / 2 ) / 3646.899 = 503.2825 / 3646.899 = 0.14

Forest Laboratories Inc's Inventory to Revenue for the quarter that ended in Mar. 2014 is calculated as

 Inventory to Revenue (Q: Mar. 2014 ) = Average Inventory / Revenue = ( (Inventory (Q: Dec. 2013 ) + Inventory (Q: Mar. 2014 )) / 2 ) / Revenue (Q: Mar. 2014 ) = ( (438.002 + 612.664) / 2 ) / 1092.278 = 525.333 / 1092.278 = 0.48

* 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.

Forest Laboratories Inc's Days Inventory for the three months ended in Mar. 2014 is calculated as:

 Days Inventory = Average Inventory (Q: Mar. 2014 ) / Cost of Goods Sold (Q: Mar. 2014 ) * Days in Period = 525.333 / 249.287 * 365 / 4 = 192.29

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

Forest Laboratories Inc's Days Sales of Inventory for the three months ended in Mar. 2014 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 ) * Days in Period = 525.333 / 1092.278 * 365 / 4 = 43.89

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

Forest Laboratories Inc's Inventory Turnover for the quarter that ended in Mar. 2014 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Mar. 2014 ) / Average Inventory (Q: Mar. 2014 ) = 249.287 / 525.333 = 0.47

* 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.

Forest Laboratories Inc Annual Data

 Mar05 Mar06 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 inventory2rev 0.19 0.21 0.16 0.11 0.10 0.10 0.10 0.08 0.11 0.14

Forest Laboratories Inc Quarterly Data

 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 inventory2rev 0.35 0.34 0.36 0.42 0.51 0.48 0.51 0.55 0.53 0.48
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