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Airgas Inc  (NYSE:ARG) Inventory Turnover: 1.16 (As of Mar. 2016)

Inventory turnover measures how fast the company turns over its inventory within a year. It is calculated as Cost of Goods Sold divided by Total Inventories. Airgas Inc's Cost of Goods Sold for the three months ended in Mar. 2016 was \$550 Mil. Airgas Inc's Total Inventories for the quarter that ended in Mar. 2016 was \$472 Mil. Airgas Inc's inventory turnover for the quarter that ended in Mar. 2016 was 1.16.

Days Inventory indicates the number of days of goods in sales that a company has in the inventory. Airgas Inc's Days Inventory for the three months ended in Mar. 2016 was 78.42.

Total Inventories can be measured by Days Sales of Inventory (DSI). Airgas Inc's days sales of inventory (DSI) for the three months ended in Mar. 2016 was 33.31.

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. Airgas Inc's Inventory-to-Revenue for the quarter that ended in Mar. 2016 was 0.37.

Historical Data

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

Airgas Inc Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Inventory Turnover 5.64 5.03 4.72 4.95 4.93

Airgas Inc Quarterly Data

 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Inventory Turnover 1.20 1.28 1.29 1.16 1.16

Calculation

Airgas Inc's Inventory Turnover for the fiscal year that ended in Mar. 2016 is calculated as

 Inventory Turnover (A: Mar. 2016 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (A: Mar. 2016 ) / ( (Total Inventories (A: Mar. 2015 ) + Total Inventories (A: Mar. 2016 )) / 2 ) = 2301.598 / ( (474.07 + 459.521) / 2 ) = 2301.598 / 466.7955 = 4.93

Airgas Inc's Inventory Turnover for the quarter that ended in Mar. 2016 is calculated as

 Inventory Turnover (Q: Mar. 2016 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (Q: Mar. 2016 ) / ( (Total Inventories (Q: Dec. 2015 ) + Total Inventories (Q: Mar. 2016 )) / 2 ) = 549.677 / ( (485.23 + 459.521) / 2 ) = 549.677 / 472.3755 = 1.16

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

Explanation

Inventory Turnover measures how fast the company turns over its inventory within a year. A higher inventory turnover means the company has light inventory. Therefore the company spends less money on storage, write downs, and obsolete inventory. If the inventory is too light, it may affect sales because the company may not have enough to meet demand.

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

Airgas Inc's Days Inventory for the three months ended in Mar. 2016 is calculated as:

 Days Inventory = Total Inventories (Q: Mar. 2016 ) / Cost of Goods Sold (Q: Mar. 2016 ) * Days in Period = 472.3755 / 549.677 * 365 / 4 = 78.42

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

Airgas Inc's Days Sales of Inventory for the three months ended in Mar. 2016 is calculated as:

 Days Sales of Inventory (DSI) = Total Inventories (Q: Mar. 2016 ) / Revenue (Q: Mar. 2016 ) * Days in Period = 472.3755 / 1294.084 * 365 / 4 = 33.31

3. 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.

Airgas Inc's Inventory to Revenue for the quarter that ended in Mar. 2016 is calculated as

 Inventory-to-Revenue = Total Inventories (Q: Mar. 2016 ) / Revenue (Q: Mar. 2016 ) = 472.3755 / 1294.084 = 0.37

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

Be Aware

Usually retailers pile up their inventories at holiday seasons to meet the stronger demand. Therefore, the inventory of a particular quarter of a year should not be used to calculate inventory turnover. An average inventory is a better indication.

Related Terms