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ShangPharma Corp (NYSE:SHP)
Inventory to Revenue
0.09 (As of Sep. 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. ShangPharma Corp's average inventory for the quarter that ended in Sep. 2012 was $2.9 Mil. ShangPharma Corp's revenue for the three months ended in Sep. 2012 was $31.9 Mil. ShangPharma Corp's inventory to revenue ratio for the quarter that ended in Sep. 2012 was 0.09.

ShangPharma Corp's inventory to revenue ratio for the quarter that ended in Sep. 2012 increased from Jun. 2012 (0.09) to Jun. 2012 (0.09)

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. ShangPharma Corp's days inventory for the three months ended in Sep. 2012 was 11.33.

Inventory can be measured by Days Sales of Inventory (DSI). ShangPharma Corp's days sales of inventory (DSI) for the three months ended in Sep. 2012 was 8.21.

Inventory turnover measures how fast the company turns over its inventory within a year. ShangPharma Corp's inventory turnover for the quarter that ended in Sep. 2012 was 8.03.


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.

ShangPharma Corp's Inventory to Revenue for the fiscal year that ended in Dec. 2011 is calculated as

Inventory to Revenue
=( (Inventory (A: Dec. 2010 )+Inventory (A: Dec. 2011 ))/ 2 )/Revenue (A: Dec. 2011 )
=( (1.259+2.842)/ 2 )/111.602
=2.0505/111.602
=0.02

ShangPharma Corp's Inventory to Revenue for the quarter that ended in Sep. 2012 is calculated as

Inventory to Revenue
=( (Inventory (Q: Jun. 2012 )+Inventory (Q: Sep. 2012 ))/ 2 )/Revenue (Q: Sep. 2012 )
=( (2.752+3.002)/ 2 )/31.885
=2.877/31.885
=0.09

* 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.

ShangPharma Corp's Days Inventory for the three months ended in Sep. 2012 is calculated as:

Days Inventory=Average Inventory (Q: Sep. 2012 )/Cost of Goods Sold (Q: Sep. 2012 )*Days in Period
=2.877/23.101*91
=11.33

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

ShangPharma Corp's Days Sales of Inventory for the three months ended in Sep. 2012 is

Days Sales of Inventory (DSI)=Average Inventory (Q: Sep. 2012 )/Revenue (Q: Sep. 2012 )*Days in Period
=2.877/31.885*91
=8.21

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

ShangPharma Corp's Inventory Turnover for the quarter that ended in Sep. 2012 is calculated as

Inventory Turnover=Cost of Goods Sold (Q: Sep. 2012 ) / Average Inventory (Q: Sep. 2012 )
=23.101 / 2.877
=8.03

* 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.

ShangPharma Corp Annual Data

Dec08Dec09Dec10Dec11
inventory2rev 0.000.000.000.000.000.000.000.020.010.02

ShangPharma Corp Quarterly Data

Dec09Jun10Sep10Dec10Mar11Sep11Dec11Mar12Jun12Sep12
inventory2rev 0.030.000.050.050.060.070.080.090.090.09
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