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Zale Corp (NYSE:ZLC)
Inventory to Revenue
1.35 (As of Jan. 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. Zale Corp's average inventory for the quarter that ended in Jan. 2014 was \$884 Mil. Zale Corp's revenue for the three months ended in Jan. 2014 was \$656 Mil. Zale Corp's inventory to revenue ratio for the quarter that ended in Jan. 2014 was 1.35.

Zale Corp's inventory to revenue ratio for the quarter that ended in Jan. 2014 declined from Oct. 2013 (2.30) to Oct. 2013 (1.35)

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. Zale Corp's days inventory for the three months ended in Jan. 2014 was 261.13.

Inventory can be measured by Days Sales of Inventory (DSI). Zale Corp's days sales of inventory (DSI) for the three months ended in Jan. 2014 was 122.85.

Inventory turnover measures how fast the company turns over its inventory within a year. Zale Corp's inventory turnover for the quarter that ended in Jan. 2014 was 0.35.

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.

Zale Corp's Inventory to Revenue for the fiscal year that ended in Jul. 2013 is calculated as

 Inventory to Revenue (A: Jul. 2013 ) = Average Inventory / Revenue = ( (Inventory (A: Jul. 2012 ) + Inventory (A: Jul. 2013 )) / 2 ) / Revenue (A: Jul. 2013 ) = ( (741.788 + 767.54) / 2 ) / 1888.016 = 754.664 / 1888.016 = 0.40

Zale Corp's Inventory to Revenue for the quarter that ended in Jan. 2014 is calculated as

 Inventory to Revenue (Q: Jan. 2014 ) = Average Inventory / Revenue = ( (Inventory (Q: Oct. 2013 ) + Inventory (Q: Jan. 2014 )) / 2 ) / Revenue (Q: Jan. 2014 ) = ( (903.282 + 864.275) / 2 ) / 656.449 = 883.7785 / 656.449 = 1.35

* 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.

Zale Corp's Days Inventory for the three months ended in Jan. 2014 is calculated as:

 Days Inventory = Average Inventory (Q: Jan. 2014 ) / Cost of Goods Sold (Q: Jan. 2014 ) * Days in Period = 883.7785 / 308.83 * 365 / 4 = 261.13

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

Zale Corp's Days Sales of Inventory for the three months ended in Jan. 2014 is

 Days Sales of Inventory (DSI) = Average Inventory (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 ) * Days in Period = 883.7785 / 656.449 * 365 / 4 = 122.85

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

Zale Corp's Inventory Turnover for the quarter that ended in Jan. 2014 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Jan. 2014 ) / Average Inventory (Q: Jan. 2014 ) = 308.83 / 883.7785 = 0.35

* 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.

Zale Corp Annual Data

 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 inventory2rev 0.35 0.35 0.36 0.40 0.42 0.43 0.45 0.41 0.39 0.40

Zale Corp Quarterly Data

 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 inventory2rev 2.25 1.26 1.79 1.87 2.31 1.30 1.88 1.91 2.30 1.35
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