Unsold Inventory Index

  

Categories: Company Management

Yes, we actually track this. Companies report the balance sheet number; they track inventory levels copiously. We then add up the reported inventories of all n-hundred companies tracked in the index.

And everything is relative in context. That is, some subsets of inventories are cyclical, right? You'd expect tractor part-related inventories to be depleted in September, and then restocked into May when they start selling a lot of tractors again, at least those for farming purposes.

If, with all the proper stats elements adjusted, inventories then rise on a relative and absolute basis, that's likely a bad moon a-risin' for the economy. Less demand than what companies expected; companies will have over-produced stuff to sell. So then they have to cut prices to move things off the shelves, and...it's all just a mess.

So that inventory index number is actually really important for investors and economists trying to figure out if the canary in the mineshaft is dying, or just, um...yawning.

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Finance: What is inventory?2 Views

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Finance allah shmoop What is inventory Well it's Just stuff

00:07

you have for sale in one form or another An

00:10

auto dealer Well all those cars she has sitting out

00:13

there in the sun is a dive bombing targets for

00:16

the birds Yeah while their inventory to the car dealership

00:19

the cars are inventory the loads of nose hair trimmers

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sitting on the shelves at the well appointed nostril fine

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store best nostril trimming store in the world Yet their

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inventory albeit kind of gross ish inventory especially after use

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the four thousand yards of denim cloth sitting in the

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weaving factory waiting for thirteen year old girls in thailand

00:41

toe weave it all together to make levi's for the

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gap Yep that cloth is inventory It isn't finished inventory

00:48

It's just a work in process not yet ready for

00:51

prime time or a prime thigh or whatever But it's

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an asset for the company who owns it and it

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is held as inventory on the balance sheet Work in

01:00

process right there at the balance sheet right there Okay

01:03

And when that inventory is sold and turned into revenues

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it'll just become part of the expenses line on the

01:10

income statement usually has cost of goods sold or caw

01:14

Gse that's What people in the accounting bids say Cocks

01:17

thie Inventory is a good but inventory is always good

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Of course as many a customer has learned after taking

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a hefty shock straight to the hunger And that hurts

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