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BHP Billiton Ltd  (NYSE:BHP) Total Inventories: \$3,673 Mil (As of Jun. 2017)

BHP Billiton Ltd's total inventories for the quarter that ended in Jun. 2017 was \$3,673 Mil. BHP Billiton Ltd's average total inventories from the quarter that ended in Dec. 2016 to the quarter that ended in Jun. 2017 was \$3,586 Mil.

In Ben Graham's calculation of liquidation value, inventory is only considered worth half of its book value. BHP Billiton Ltd's liquidation value for the quarter that ended in Jun. 2017 was \$-41,413 Mil.

Inventory can be measured by days sales of inventory (DSI). BHP Billiton Ltd's days sales of inventory (DSI) for the six months ended in Jun. 2017 was 33.58.

Days Inventory indicates the number of days of goods in sales that a company has in the inventory.

Inventory Turnover measures how fast the company turns over its inventory within a year. BHP Billiton Ltd's Inventory Turnover for the quarter that ended in Jun. 2017 was 0.00.

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. BHP Billiton Ltd's Inventory-to-Revenue for the quarter that ended in Jun. 2017 was 0.18.

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

BHP Billiton Ltd Annual Data

 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17 Total Inventories 5,821.00 6,013.00 4,292.00 3,411.00 3,673.00

BHP Billiton Ltd Semi-Annual Data

 Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Total Inventories 4,292.00 3,914.00 3,411.00 3,499.00 3,673.00

Calculation

Total Inventories includes the raw materials, work-in-process goods and completely finished goods of a company. It is a portion of a company's current assets.

Explanation

Inventory control is an important part of business operation. If a company does not have enough inventory, it may not be able to meet customers' required delivery time. If it has too much inventory, the cost of holding the inventory can be high.

1. In Ben Graham's calculation of liquidation value, inventory is only considered worth half of its book value.

BHP Billiton Ltd's liquidation value for the quarter that ended in Jun. 2017 is

 Liquidation value (Q: Jun. 2017 ) = Cash, Cash Equivalents, Marketable Securities - Total Liabilities + (0.75 * Accounts Receivable) + (0.5 * Total Inventories) = 14225 - 59748 + 0.75 * 3031 + 0.5 * 3673 = -41,413

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

BHP Billiton Ltd's Days Sales of Inventory for the six months ended in Jun. 2017 is

 Days Sales of Inventory (DSI) = Total Inventories (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 ) * Days in Period = 3586 / 19489 * 365 / 2 = 33.58

3. Days Inventory indicates the number of days of goods in sales that a company has in the inventory.

BHP Billiton Ltd's Days Inventory for the six months ended in Jun. 2017 is calculated as:

 Days Inventory = Total Inventories (Q: Jun. 2017 ) / Cost of Goods Sold (Q: Jun. 2017 ) * Days in Period = 3586 / 0 * 365 / 2 =

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

BHP Billiton Ltd's Inventory Turnover for the quarter that ended in Jun. 2017 is calculated as

 Inventory Turnover = Cost of Goods Sold (Q: Jun. 2017 ) / Total Inventories (Q: Jun. 2017 ) = 0 / 3586 = 0.00

5. 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.

BHP Billiton Ltd's Inventory to Revenue for the quarter that ended in Jun. 2017 is calculated as

 Inventory-to-Revenue = Total Inventories (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 ) = 3586 / 19489 = 0.18

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Be Aware

Manufacturers with durable competitive advantages have the advantage that the products they sell do not change, and therefore will never become obsolete. Buffett likes this advantage.

When identifying manufacturers with durable competitive advantage, look for inventory and net earnings that rise correspondingly. This indicates that the company is finding profitable ways to increase sales which called for an increase in inventory.

Manufacturers with inventories that spike up and down are indicative of competitive industries subject to boom and bust.

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