Open AccessA Macroeconomic Analysis Of Inventory/Sales Ratios
Author(s) -
William M. Bassin,
Michael T. Marsh,
Stefanie Walitzer
Publication year - 2011
Publication title -
journal of business and economics research
Language(s) - English
Resource type - Journals
eISSN - 2157-8893
pISSN - 1542-4448
DOI - 10.19030/jber.v1i10.3059
Subject(s) - inventory investment , inventory turnover , inventory valuation , perpetual inventory , business , investment (military) , macro , marketing , value (mathematics) , government (linguistics) , economics , accounting , finance , inventory control , inventory theory , econometrics , statistics , linguistics , philosophy , mathematics , politics , stock exchange , computer science , law , programming language , political science
Metzlers (1941) research on the relationship between inventory and business cycles initiated serious interest in inventory behavior and its effect on the behavior of firms. A flurry of related research took place in the following two decades. Research of the time clearly demonstrated that, at a macro level, the inventory behaviors are significant features in business cycles. One measure of inventory behavior introduced and analyzed was the inventory-to-sales ratio. We continue to believe that understanding of inventory behavior at both the macro and microeconomic levels is a prerequisite to understanding factors that determine a firms success, and that analysis of the inventory-to-sales ratio is important component of inventory behavior. The U.S. Department of Commerce and other government and private institutions track this ratio and report regularly. Financial analysts use both a company's trend and its comparative value within a sector to make investment decisions.