Accounting / July 19, 2018 / Sharon Hardin
In the context of corporate financial reporting, the income statement summarizes a company's revenues (sales) and expenses, quarterly and annually for its fiscal year. The final net figure, as well as various other numbers in the statement, are of major interest to the investment community.
This means that you divide net sales, from the income statement, from the inventory figure on the balance sheet and you get a number that is a number of times. That number signifies the number of times inventory is sold and restocked each year. If the number is high, you may be in danger of stockouts. If it is low, watch out for obsolete inventory.
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