This figure represents the dollar value of a company's inventories for the time period listed. Inventory, as with other balance-sheet items, is shown in millions of dollars ($M) and is current as of the last day of the specified reporting period. This figure includes all product inventories of manufacturers as well as utility inventory such as fuel and gas plus all securities held in inventory by brokerage houses.
Benefit
When expressed as a percentage of total assets, inventory can give you an idea of how much of a company’s assets are tied up in products and materials. Retailers must generally keep a substantial amount of assets in inventory.
Origin
This figure is calculated in-house based on information provided in the company’s balance sheet.
For the Pros
Use the following formula to find cheap stocks. If this number is high relative to the company’s market capitalization, the stock is considered cheap:
Current Assets Quarter 1 – Inventory Quarter 1 – Current Liabilities Quarter 1 – Long Term Debt Quarter 1