I read many times that inventory loss has occurred to lower petrol price, etc. But I don’t have a method to know if that really happened or not. Basically, after reading I can assume that petrol became much cheaper then it is possible. So, said statement has some meaning. But how do I know while screening the company’s Balance Sheet myself? Inventory loss can depend of how much raw material and produced good company keep in advance.
So, please tell me how to know all these which analyzing any company.
Its important we understand what raw materials go into the product and at what propositions. You can easily find that out by dividing cogs / sales. If business has multiple products we need to analyse it segmentwise.
Also look for the decrease / increase in inventory. Closing inventory is stated at cost or market value whichever is lower. Hence if there is an Unusual movement in valuation we will be able to know.
Hope that clarifies.
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Thank you for the helpful info but I am puzzled. Need for details. Hoping more posts come here.
