Page 23 - FINAL CFA I SLIDES JUNE 2019 DAY 8
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Session Unit 8:
28. Inventories
LOS 28.j: Explain issues that analysts should consider when examining a company’s
inventory disclosures and other sources of information. P.194
Signal of firms future revenues and earnings:
1. What does build up of raw materials or WIP inventory mean?
2. Finished goods inventory increasing whilst above is declining?
tanties
3. Finished good raising faster than sales (declining demand or
obsolete stock/holding costs/cash flows?)
4. What does high inventory turnover mean? (may also mean you are not
holding enough or write down occurring –check this with sales growth as
high turnover and low sales growth in industry?)
