1 Key Ratio to Help You Detect Investment Problems in the Horizon | The Motley Fool Singapore: "“[E]xcesses of inventory, time and time again, is a good indicator of future slowdown in production"
He added that this was especially true for industries which are subjected to rapid changes in products and taste. Chief examples included high fashion and seasonal goods.
To do this check, he suggested comparing the change in inventory levels with previous reporting periods. The percentage change in inventory can then be compared to the percentage change in revenue for the company for the same periods. If the change in inventory exceeded that of revenue, it might lead to problems down the road.
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