An important and often
overlooked ratio that indicates inventory levels.
Things to remember
A low turnover is usually a bad
sign because products tend to deteriorate as they
sit in a warehouse.
Companies selling perishable
items have very high turnover.
For more accurate inventory turnover
figures, the average inventory figure, ((beginning
inventory + ending inventory)/2), is used when computing
inventory turnover. Average inventory accounts for
any seasonality effects on the ratio.
[Click
on the buttons above to see the financial statements]
For Cory's Tequila Co.
$4,240
=
6.50
$652
Inventory Analysis Cory's Tequila Co. inventory has gone up almost 100% since last
year, this could mean nothing or something. There could be something
fundamentally wrong. Perhaps sales are slowing. A change of
100% is quite substantial and should be a cause for concern
if sales are slowing. But if we look more closely at Cory's Tequila Co.'s sales it shows that product sales have increased
almost 50% since last year. In other words the higher inventory
could simply be a factor of higher demand.
Disnat is a division of Desjardins Securities. Desjardins Securities is a member of the Investment Industry Regulatory
Organization of Canada (IIROC)
and a member of the Canadian Investor Protection Fund.
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