Dylan Lewis: Evan, any thoughts on why they do this, beyond just the very conventional cost, because it's cheaper to outsource production to some of these countries where labor's a little bit cheaper? Other Inventory Turnover Ratios You may also want to know Companies with similar Inventory Turnover Ratio for the quarter ending Sep 29 2018, within Technology Sector Inventory Turnover Ratio Cost of revenues at quarter ending Sep 29 2018 Inventories at quarter ending Sep 29 2018 87. We haven't seen a ton of this, but there is the possibility of quality control being a problem. Using the second approach, inventory turns over 10 times a year and is on hand for approximately 36 days. Apple: Inventory extraordinaire While it can be susceptible to shortages every now and then, Cupertino has mastered the ancient art of balancing its inventory -- keeping just enough on hand to meet surging demand while minimizing impairment risk. The second component is sales. They build it and they ship it directly to you.
Dell and Samsung rank two and three in Apple's category, turning over their inventory roughly once every 10 and 21 days respectively. Inventory turnover ratio for both decreased in 2013 and then increased again in 2014. Not having enough stock on hand to meet a sudden surge in demand can cause a stock-out, leading to missed sales and unhappy customers. This ratio is important because total turnover depends on two main components of performance. Within Technology sector 19 other companies have achieved higher inventory turnover ratio.
Such trends are attributable to the overall economic growth expectations. Hence a comparison would only be fair if made between businesses in the same industry. Cost of Sales Growth -12. Otherwise, having a lot of inventory is not really a good thing, because it just sits there and risks getting written down, if you can't sell it, and if you have too much, it's just kind of a big pain. Other Inventory Turnover Ratios You may also want to know Companies with similar Inventory Turnover Ratio for the quarter ending Jun 30 2018, within Technology Sector Inventory Turnover Ratio Cost of revenues at quarter ending Jun 30 2018 Inventories at quarter ending Jun 30 2018 48. Good investing, Marc Lichtenfeld Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice.
While you can get an idea of what your industry-specific turnover ratio should be by consulting , nothing replaces crunching the numbers yourself. For example, the cloth used to make the clothing would be inventory for the clothing manufacturer. We Fools may not all hold the same opinions, but we all believe that makes us better investors. Using a technique like discounting may clear out inventory but has the effect of reducing profitability. And despite Apple having this aura of innovation it deserved with the iPhone and the iPad, and despite Steve Jobs being widely perceived as a product guy and design maximalist, he did not appoint a techie or a designer to manage Apple.
Inventory turnover ratio of Walmart is comparable with Costco but not with Caterpillar or Deere. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The speed at which a company can sell inventory is a critical measure of business performance. In other words, it measures how many times a company sold its total average inventory dollar amount during the year. Quarter Dec 30 2017 I. When demand goes through the roof, Apple reacts relatively quickly with huge hiring sprees over at Foxconn. It may indicate a problem with the goods being offered for sale or be a result of too little marketing.
Inventory Turnover Days Inventory Turnover Days Days Inventory Outstanding — an activity ratio measuring the efficiency of the company's inventories management. If sales or down or the economy is underperforming, it may show up as a lower inventory turnover ratio. You can easily sell a picture of a leaked iPhone, and get paid a ton of money if you can smuggle it out. It's because inventory sits on their balance sheet for such a short amount of time. Low inventory turnover means that average inventory is a higher percent of sales. Dell and Samsung followed Apple in the electronics category with turnovers every 10 and 21 days, respectively. Within Technology sector 19 other companies have achieved higher inventory turnover ratio.
There's always this concern of working conditions being substandard, of being overly demanding, of overtime being required, things like that. Because of this, the computed period of one turn of the average inventories will be higher than it actually is. Conversely, if inventory turnover is very high, they might not be buying enough inventory and may be missing out on sales opportunities. Analysis Inventory turnover ratio is used to assess how efficiently a business is managing its inventories. This is a company that sells hundreds of millions of hardware gadgets all over the world and yet it doesn't actually need to stockpile its goods. Monday, I launched a new trading service that uses super-computing technology to analyze both technical and fundamental data. Dell, which practically invented , does 36.
It is calculated as divided by. Posts: 14605; Member since: 19 Dec 2008 Amazingly, false demand makes people want it more, which makes sales go up. One variable that I pay close attention to, but is often ignored by most, is inventory turnover. Under no circumstances does any information posted on GuruFocus. Looking at historical days of inventory adds additional perspective.
In its eighth annual Supply Chain Business Insider , Gartner analysts once again ranked Apple's supply chain as the best in the world, boasting an industry-leading 20. On the other hand, companies turning their inventory over at a sluggish pace, or overstocking, are unnecessarily limiting their cash flow, and may get themselves into a position of needing to sell their stock at cost or liquidate at a loss. However, a very high value of this ratio may result in stock-out costs, i. For instance, reducing purchase order quantity and increasing the frequency means less inventory sitting idle in your facilities. For example, some companies will only ship to a customer when all the back-orders have been complete. Cook started at Apple shortly after Jobs' return as the last millennium was winding down.
If it's too high, that likely means the company has too much product and runs the risk of getting hit with the aforementioned writedowns and impairments. It can help small retailers to better manage decisions on how much inventory to buy, how to evaluate how inventory is performing and assist with future inventory procurement. For example, retailers like Best Buy Co Inc would likely have higher inventory leading up to the holidays in Q4 and lower inventory levels in Q1 following the holidays. It also requires using effective inventory management software to track and monitor your inventory on a regular basis. Apple turns over its inventory once every five days.