How do I know if I have an inventory problem?

Kartik Dube

Outcome

• In Technology Hardware & Equipment, 10 percentile companies have only 23 days of inventory. Whereas 90 percentile companies have 196 days, which is nearly 8 times the 10 percentile of companies.

• In Software & Services, 10 percentile companies have only 2 days of inventory. Whereas 90 percentile companies have 89 days, which is nearly 89 times the 10 percentile of companies.

• In Semiconductors & Semiconductor Equipment, 10 percentile companies have only 46 days of inventory. Whereas 90 percentile companies have 275 days, which is nearly 5 times the 10 percentile of companies.

• Clearly, the 90 percentile of companies in Software and Services are doing most poorly.

Outcome

• Activision Blizzard is much bigger than Corsair Gaming in all dimensions, Total revenue, Gross Profit, Operating Income, Profitable before tax, and net income.

Outcome

• Activision ranks above Corsair in inventory days even after having a big company size.

Outcome IV

• Inventory days of Activision are consistently 8 days whereas Corsair has 65 days.

• The cash conversion cycle of Corsair is much much higher than Activision.

  
  

Outcome V

• Return on Asset is very high in Corsair (0.47) and the liability asset ratio is also very high (0.83).

• For Activision, the return on asset is very high (0.82) but the total revenue growth is very very poor (0.09).