Manufacturing and Trade Inventories and Sales
TALK ABOUT THE REDHEADED STEPCHILD of economic indicators! Few investors, either professional or lay, pay much attention to inventories. Even popular economics texts largely ignore them. Not so corporate managers and economists. Both these groups are well aware of the importance of inventory levels—and of the dangers of miscalculating them.
Business inventories are “waiting room” goods—products that have been manufactured, processed, or mined but have not yet been sold to a final user. As such, they are very important in the calculation of gross domestic product (GDP) (see Chapter 1). GDP is the total amount of final goods and services produced in an economy in a given period. That includes goods ...