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Toll Brothers Inc  (NYSE:TOL) Inventory Turnover: 0.15 (As of Jul. 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. Toll Brothers Inc's Cost of Goods Sold for the three months ended in Jul. 2017 was \$1,176 Mil. Toll Brothers Inc's Total Inventories for the quarter that ended in Jul. 2017 was \$7,618 Mil. Toll Brothers Inc's inventory turnover for the quarter that ended in Jul. 2017 was 0.15.

Days Inventory indicates the number of days of goods in sales that a company has in the inventory. Toll Brothers Inc's Days Inventory for the three months ended in Jul. 2017 was 591.10.

Total Inventories can be measured by Days Sales of Inventory (DSI). Toll Brothers Inc's days sales of inventory (DSI) for the three months ended in Jul. 2017 was 462.54.

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. Toll Brothers Inc's Inventory-to-Revenue for the quarter that ended in Jul. 2017 was 5.07.

Historical Data

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

Toll Brothers Inc Annual Data

 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16 Inventory Turnover 0.43 0.51 0.55 0.48 0.58

Toll Brothers Inc Quarterly Data

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Inventory Turnover 0.13 0.21 0.10 0.14 0.15

Calculation

Toll Brothers Inc's Inventory Turnover for the fiscal year that ended in Oct. 2016 is calculated as

 Inventory Turnover (A: Oct. 2016 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (A: Oct. 2016 ) / ( (Total Inventories (A: Oct. 2015 ) + Total Inventories (A: Oct. 2016 )) / 2 ) = 4144.065 / ( (6997.516 + 7353.967) / 2 ) = 4144.065 / 7175.7415 = 0.58

Toll Brothers Inc's Inventory Turnover for the quarter that ended in Jul. 2017 is calculated as

 Inventory Turnover (Q: Jul. 2017 ) = Cost of Goods Sold / Total Inventories = Cost of Goods Sold (Q: Jul. 2017 ) / ( (Total Inventories (Q: Apr. 2017 ) + Total Inventories (Q: Jul. 2017 )) / 2 ) = 1176.028 / ( (7602.695 + 7633.568) / 2 ) = 1176.028 / 7618.1315 = 0.15

* 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.

Toll Brothers Inc's Days Inventory for the three months ended in Jul. 2017 is calculated as:

 Days Inventory = Total Inventories (Q: Jul. 2017 ) / Cost of Goods Sold (Q: Jul. 2017 ) * Days in Period = 7618.1315 / 1176.028 * 365 / 4 = 591.10

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

Toll Brothers Inc's Days Sales of Inventory for the three months ended in Jul. 2017 is calculated as:

 Days Sales of Inventory (DSI) = Total Inventories (Q: Jul. 2017 ) / Revenue (Q: Jul. 2017 ) * Days in Period = 7618.1315 / 1502.909 * 365 / 4 = 462.54

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.

Toll Brothers Inc's Inventory to Revenue for the quarter that ended in Jul. 2017 is calculated as

 Inventory-to-Revenue = Total Inventories (Q: Jul. 2017 ) / Revenue (Q: Jul. 2017 ) = 7618.1315 / 1502.909 = 5.07

* 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.

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