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Walgreen Co (NYSE:WAG)
Inventory to Revenue
0.33 (As of Aug. 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. Walgreen Co's average inventory for the quarter that ended in Aug. 2014 was \$6,258 Mil. Walgreen Co's revenue for the three months ended in Aug. 2014 was \$19,057 Mil. Walgreen Co's inventory to revenue ratio for the quarter that ended in Aug. 2014 was 0.33.

Walgreen Co's inventory to revenue ratio for the quarter that ended in Aug. 2014 declined from May. 2014 (0.35) to May. 2014 (0.33)

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. Walgreen Co's days inventory for the three months ended in Aug. 2014 was 41.59.

Inventory can be measured by Days Sales of Inventory (DSI). Walgreen Co's days sales of inventory (DSI) for the three months ended in Aug. 2014 was 29.96.

Inventory turnover measures how fast the company turns over its inventory within a year. Walgreen Co's inventory turnover for the quarter that ended in Aug. 2014 was 2.19.

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.

Walgreen Co's Inventory to Revenue for the fiscal year that ended in Aug. 2014 is calculated as

 Inventory to Revenue = ( (Inventory (A: Aug. 2013 ) + Inventory (A: Aug. 2014 )) / 2 ) / Revenue (A: Aug. 2014 ) = ( (6852 + 6076) / 2 ) / 76392 = 6464 / 76392 = 0.08

Walgreen Co's Inventory to Revenue for the quarter that ended in Aug. 2014 is calculated as

 Inventory to Revenue = ( (Inventory (Q: May. 2014 ) + Inventory (Q: Aug. 2014 )) / 2 ) / Revenue (Q: Aug. 2014 ) = ( (6439 + 6076) / 2 ) / 19057 = 6257.5 / 19057 = 0.33

* 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.

Walgreen Co's Days Inventory for the three months ended in Aug. 2014 is calculated as:

 Days Inventory = Average Inventory (Q: Aug. 2014 ) / Cost of Goods Sold (Q: Aug. 2014 ) * Days in Period = 6257.5 / 13730 * 365 / 4 = 41.59

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

Walgreen Co's Days Sales of Inventory for the three months ended in Aug. 2014 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Aug. 2014 ) / Revenue (Q: Aug. 2014 ) * Days in Period = 6257.5 / 19057 * 365 / 4 = 29.96

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

Walgreen Co's Inventory Turnover for the quarter that ended in Aug. 2014 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Aug. 2014 ) / Average Inventory (Q: Aug. 2014 ) = 13730 / 6257.5 = 2.19

* 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.

Walgreen Co Annual Data

 Aug05 Aug06 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 inventory2rev 0.12 0.12 0.12 0.12 0.11 0.11 0.11 0.11 0.10 0.09

Walgreen Co Quarterly Data

 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 inventory2rev 0.40 0.41 0.43 0.40 0.39 0.38 0.40 0.38 0.35 0.33
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