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Richardson Electronics Ltd  (NAS:RELL) Inventory Turnover: 0.56 (As of Aug. 2017)

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. Richardson Electronics Ltd's Cost of Goods Sold for the three months ended in Aug. 2017 was \$24.8 Mil. Richardson Electronics Ltd's Total Inventories for the quarter that ended in Aug. 2017 was \$44.4 Mil. Richardson Electronics Ltd's inventory turnover for the quarter that ended in Aug. 2017 was 0.56.

Days Inventory indicates the number of days of goods in sales that a company has in the inventory. Richardson Electronics Ltd's Days Inventory for the three months ended in Aug. 2017 was 163.21.

Total Inventories can be measured by Days Sales of Inventory (DSI). Richardson Electronics Ltd's days sales of inventory (DSI) for the three months ended in Aug. 2017 was 109.62.

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. Richardson Electronics Ltd's Inventory-to-Revenue for the quarter that ended in Aug. 2017 was 1.20.

Historical Data

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

Richardson Electronics Ltd Annual Data

 May08 May09 May10 May11 May12 May13 May14 May15 May16 May17 Inventory Turnover 2.90 2.86 2.64 2.31 2.11

Richardson Electronics Ltd Quarterly Data

 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Inventory Turnover 0.51 0.52 0.50 0.59 0.56

Calculation

Richardson Electronics Ltd's Inventory Turnover for the fiscal year that ended in May. 2017 is calculated as

 Inventory Turnover (A: May. 2017 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (A: May. 2017 ) / ( (Total Inventories (A: May. 2016 ) + Total Inventories (A: May. 2017 )) / 2 ) = 92.989 / ( (45.422 + 42.749) / 2 ) = 92.989 / 44.0855 = 2.11

Richardson Electronics Ltd's Inventory Turnover for the quarter that ended in Aug. 2017 is calculated as

 Inventory Turnover (Q: Aug. 2017 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (Q: Aug. 2017 ) / ( (Total Inventories (Q: May. 2017 ) + Total Inventories (Q: Aug. 2017 )) / 2 ) = 24.847 / ( (42.749 + 46.136) / 2 ) = 24.847 / 44.4425 = 0.56

* 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.

Richardson Electronics Ltd's Days Inventory for the three months ended in Aug. 2017 is calculated as:

 Days Inventory = Total Inventories (Q: Aug. 2017 ) / Cost of Goods Sold (Q: Aug. 2017 ) * Days in Period = 44.4425 / 24.847 * 365 / 4 = 163.21

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

Richardson Electronics Ltd's Days Sales of Inventory for the three months ended in Aug. 2017 is calculated as:

 Days Sales of Inventory (DSI) = Total Inventories (Q: Aug. 2017 ) / Revenue (Q: Aug. 2017 ) * Days in Period = 44.4425 / 36.995 * 365 / 4 = 109.62

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.

Richardson Electronics Ltd's Inventory to Revenue for the quarter that ended in Aug. 2017 is calculated as

 Inventory-to-Revenue = Total Inventories (Q: Aug. 2017 ) / Revenue (Q: Aug. 2017 ) = 44.4425 / 36.995 = 1.20

* 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