Inventories are goods in production and completed goods available for sale, but not yet sold. Work in progress inventory is usually stable, so changing inventories relative to sales give an indication of the relationship between product availability and sales. Rising inventories means that the company is producing more than it is selling and product backing up might force a reduction in the product price. For many companies, rising inventories forecast a falling margin since greater inventory might require a cut in the product price to move into the market.

Falling inventory indicates strong demand, and may give the company greater product pricing flexibility and result in a rising gross margin.

The GEARS report will make a reference to the effect of changing inventories, if those changes have been important to making a successful investment decision in the record of the company.

Back to Mission