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# Reynolds American Inventory Turnover

: 0.74 (As of Mar. 2017)
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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. Reynolds American's Cost of Goods Sold for the three months ended in Mar. 2017 was \$1,199 Mil. Reynolds American's Total Inventories for the quarter that ended in Mar. 2017 was \$1,619 Mil. Reynolds American's Inventory Turnover for the quarter that ended in Mar. 2017 was 0.74.

Days Inventory indicates the number of days of goods in sales that a company has in the inventory. Reynolds American's Days Inventory for the three months ended in Mar. 2017 was 123.18.

Total Inventories can be measured by Days Sales of Inventory (DSI). Reynolds American's days sales of inventory (DSI) for the three months ended in Mar. 2017 was 50.08.

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. Reynolds American's Inventory-to-Revenue for the quarter that ended in Mar. 2017 was 0.55.

## Reynolds American Inventory Turnover Historical Data

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

 Reynolds American Annual Data Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Inventory Turnover     4.43 3.48 3.37 3.11 2.87

## Reynolds American Inventory Turnover Calculation

Reynolds American's Inventory Turnover for the fiscal year that ended in Dec. 2016 is calculated as

 Inventory Turnover (A: Dec. 2016 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (A: Dec. 2016 ) / ( (Total Inventories (A: Dec. 2015 ) + Total Inventories (A: Dec. 2016 )) / count ) = 4841 / ( (1734 + 1645) / 2 ) = 4841 / 1689.5 = 2.87

Reynolds American's Inventory Turnover for the quarter that ended in Mar. 2017 is calculated as

 Inventory Turnover (Q: Mar. 2017 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (Q: Mar. 2017 ) / ( (Total Inventories (Q: Dec. 2016 ) + Total Inventories (Q: Mar. 2017 )) / count ) = 1199 / ( (1645 + 1592) / 2 ) = 1199 / 1618.5 = 0.74

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

Reynolds American  (NYSE:RAI) Inventory Turnover 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.

Reynolds American's Days Inventory for the three months ended in Mar. 2017 is calculated as:

 Days Inventory = Total Inventories (Q: Mar. 2017 ) / Cost of Goods Sold (Q: Mar. 2017 ) * Days in Period = 1618.5 / 1199 * 365 / 4 = 123.18

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

Reynolds American's Days Sales of Inventory for the three months ended in Mar. 2017 is calculated as:

 Days Sales of Inventory (DSI) = Total Inventories (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 ) * Days in Period = 1618.5 / 2949 * 365 / 4 = 50.08

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.

Reynolds American's Inventory to Revenue for the quarter that ended in Mar. 2017 is calculated as

 Inventory-to-Revenue = Total Inventories (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 ) = 1618.5 / 2949 = 0.55

* 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.