Do not forget to factor in inventory, it has helped many stocks galloping

What is not mentioned above, but equally important is the Inventory.

 

Inventory concept is quite close to the people as such phrases as: poor sales Today too, there exists a pile of fruit; in a pile of leftover inventory, unsold forever ....

 

Inventories rustic way people understand that company's goods but for some reason it has not sold. Inventories touchable, visible or simply it's just a figure watching.

 

But according to "canonical" inventory concept, this is an item under current assets on the financial statements of the enterprise. Meaning a lot of inventory, as the case that the use of this index can analyze it good or bad for business.

 

Wrong views about inventory:

 

-If Said high inventories, now you think that dull? True, in many cases, and wrong in many cases. If there is a sale, the inventory right meaning more negative than positive. And if businesses deliberately hoarding goods, raw materials prices are still low ... is another story. Do not exclude the possibility that businesses are cherished ambition to buy low, waiting for the price up, sell high and profitable venture.

 

Es low inventory is good, high inventory levels are bad? Inventories bold nature of business should not have to keep inventory levels low is good, high inventory levels are bad. For example, you can not buy fresh crocodile in winter, but you can buy drinks made from crocodile almost all year. To do this, enterprises producing and processing water from crocodile crocodile from the right service to purchase and of course can not produce every few days, they stored, preserved and it makes inventory. Even their fast production, the inventory still appear in finished goods inventory items because they can not be sold immediately.

 

Es unexpected rise warehouse is abnormal? Not really. You have to look at seasonal factors and treatment history of the business inventory before the rush to sell shares because seeing unusual inventory figures. To assess the speed of rotation of inventory, people often use the system inventory turnover. This coefficient is determined by the cost of goods sold divided by average inventory. This factor is often compared over time to evaluate the governance capacity of inventories is good or bad over the years.

 

System inventory turnover showed higher sales now faster and inventory accumulation was not much. This hundred percent as well? Not! Many economists do not see it like that again. For some cases, analysts said that if the amount of inventory in the warehouse is not much and if market demand increases dramatically, it is very likely that businesses are losing customers and competitors for market part. Moreover, reserves of raw materials inputs for production may cause insufficient production lines stalled.

 

I take a practical example is the current hot steel industry. Steel prices and demand for steel is rising sharply, if the enterprise has sold out inventory before this unexpected opportunity, the right is a disaster. Opponents have customers from hoarding strategy when prices are low sitting erect antennae counting money in safes while now he "collapsed" the pride you order before worrying still more vain and he has not served while his client was most needed. Customers left him gradually.

 

-If More businesses to profit by handling inventory then I will buy, hoarding when prices fall? How well, depending on you. But do not forget that if prices fall further, you will incur heavy losses. Do not forget you can hug and do not sell well every after. Also do not forget that you may have to pay huge interest cost to purchase, costs eat up your profits steadily until sale.

 

Many stocks have soared thanks to ... Inventory

 

When shares of Tien Len Steel TLH few dozen percent increase then many new investors may rupture: Because not read financial statements Up Steel should have missed a huge opportunity. Last year, Tien Len Steel to set aside tens of billions for this inventory paragraph. Shareholders, of course, when it comes to provision recorded in cost means, means reduced profits, ie their benefits reduced. They are not eager to share what little psychology that time.

 

But things were different this year, steel prices, steel raw materials increased forward.Why. "Of Debt" inventory last year was a "piece of gold" for investors expectations. More than 800 billion old inventory had a market value equivalent to ~ 1.200 billion. Goods also easier to sell when the steel industry flourish. Up Steel shareholders of not only rely on the reversal of provision from the reserves already deducted every year, but also happy to now have much higher gross profit margin due to the cost of goods for sale inventories low.

 

A story anymore, not in a hurry to make investors forget, there is a wave of real estate stocks in 2015. The significant waves called tsunamis. The years prior to 2015, real estate estate left unsold sky accounts in the financial statements of the enterprise. Not trillions, tens of trillions that to hundreds of trillions of real estate can not be sold on the market by pulling the sluggish economy.

 

By 2015, the credit valve opens, the cumulative cash flow in the years people started running. Increased demand pushed real estate prices rising every day, every hour. And, now the real estate inventory is the occasion brought the goods sold, is the occasion to show off interest and of course, stocks rose rumbling.

 

Economic why difficult? Since it is not like mathematics, 1 + 1 should equal 2. Every business, every industry, every moment, every opportunity .... to each other in ways that goods and how to deal with it is successful new or failure of the enterprise. No casting molds to the enterprise yet at all, if they did not have thousands of business scene dissolved per quarter and have more successful businesses billions as Vinamilk, Vingroup ....

 

Online article analyzes the basics of business operations of the business, that business secrets of business we hope will help readers have more knowledge for themselves in the process of analyzing operations of enterprises and equity investment.

 

 

 

Phuong Chi

According to Young Intellectuals