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Spartech Corporation (NYSE:SEH)
Inventory to Revenue
0.36 (As of Oct. 2012)

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. Spartech Corporation's average inventory for the quarter that ended in Oct. 2012 was \$102 Mil. Spartech Corporation's revenue for the three months ended in Oct. 2012 was \$287 Mil. Spartech Corporation's inventory to revenue ratio for the quarter that ended in Oct. 2012 was 0.36.

Spartech Corporation's inventory to revenue ratio for the quarter that ended in Oct. 2012 declined from Jul. 2012 (0.36) to Jul. 2012 (0.36)

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. Spartech Corporation's days inventory for the three months ended in Oct. 2012 was 36.52.

Inventory can be measured by Days Sales of Inventory (DSI). Spartech Corporation's days sales of inventory (DSI) for the three months ended in Oct. 2012 was 32.35.

Inventory turnover measures how fast the company turns over its inventory within a year. Spartech Corporation's inventory turnover for the quarter that ended in Oct. 2012 was 2.50.

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.

Spartech Corporation's Inventory to Revenue for the fiscal year that ended in Oct. 2012 is calculated as

 Inventory to Revenue (A: Oct. 2012 ) = Average Inventory / Revenue = ( (Inventory (A: Oct. 2011 ) + Inventory (A: Oct. 2012 )) / 2 ) / Revenue (A: Oct. 2012 ) = ( (91.186 + 105.099) / 2 ) / 1149.355 = 98.1425 / 1149.355 = 0.09

Spartech Corporation's Inventory to Revenue for the quarter that ended in Oct. 2012 is calculated as

 Inventory to Revenue (Q: Oct. 2012 ) = Average Inventory / Revenue = ( (Inventory (Q: Jul. 2012 ) + Inventory (Q: Oct. 2012 )) / 2 ) / Revenue (Q: Oct. 2012 ) = ( (98.248 + 105.099) / 2 ) / 286.804 = 101.6735 / 286.804 = 0.35

* 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.

Spartech Corporation's Days Inventory for the three months ended in Oct. 2012 is calculated as:

 Days Inventory = Average Inventory (Q: Oct. 2012 ) / Cost of Goods Sold (Q: Oct. 2012 ) * Days in Period = 101.6735 / 254.067 * 365 / 4 = 36.52

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

Spartech Corporation's Days Sales of Inventory for the three months ended in Oct. 2012 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Oct. 2012 ) / Revenue (Q: Oct. 2012 ) * Days in Period = 101.6735 / 286.804 * 365 / 4 = 32.35

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

Spartech Corporation's Inventory Turnover for the quarter that ended in Oct. 2012 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Oct. 2012 ) / Average Inventory (Q: Oct. 2012 ) = 254.067 / 101.6735 = 2.50

* 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.

Spartech Corporation Annual Data

 Oct03 Oct04 Oct05 Oct06 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 inventory2rev 0.10 0.11 0.09 0.08 0.08 0.08 0.09 0.07 0.08 0.09

Spartech Corporation Quarterly Data

 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 inventory2rev 0.30 0.32 0.36 0.34 0.35 0.33 0.34 0.35 0.36 0.36
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