Tuesday, June 18, 2019
Popping the Lid on Smuckers’ Goodwill

Tuesday, June 11, 2019
Not Much Fizz in LaCroix Right Now

Wednesday, May 29, 2019
An Example of Calcbench, Excel, and Insight

Monday, May 20, 2019
Research Paper: Capex Spending

Thursday, May 16, 2019
Psst: Got Any Weed?

Wednesday, May 15, 2019
Open Letter: SEC Proposed Rule for BDCs

Friday, May 10, 2019
General Motors and Workhorse

Monday, May 6, 2019
How to Find Earnings Release Data

Tuesday, April 23, 2019
Following Restructuring Costs Over Time

Monday, April 22, 2019
Capex Spending: More Than You Might Think

Saturday, April 13, 2019
When AWS Takes Over the World

Thursday, April 11, 2019
Data Trends in Focus: Restructuring Costs

Sunday, April 7, 2019
How One Customer Crushed It With Calcbench

Thursday, April 4, 2019
TJX Shows Complexity of Leasing Costs Reporting

Tuesday, April 2, 2019
CEO Pay Ratios: Some 2018 Thoughts

Wednesday, March 27, 2019
Corporate Spending: Where It Goes, 2017 vs. 2018

Monday, March 25, 2019
Health Insurers: A Bit Winded?

Friday, March 22, 2019
Our New Master Class Video

Thursday, March 21, 2019
Tech Data’s Goodwill Adjustment

Tuesday, March 19, 2019
There’s Taxes, and There’s Taxes

Archive  |  Search:
Inventory Levels Are Piling Up…
Monday, September 12, 2016

As the paranoia and uncertainty about our economy rolls merrily along, one question has been how much inventory factors into Corporate America’s behavior these days.

Is inventory growing too much, because customers aren’t buying enough? (Bad; recession might be near.) Is it falling, because customers are tearing products off the shelf? (Kinda bad; that might prompt the Fed to raise interest rates.) Or is it hovering near some equilibrium, keeping pace with the mildly good economic growth we’ve been seeing lately? (Kinda good, depending on your perspective.)

The short answer is that total inventory, among all filers reporting inventory on the balance sheet, is growing: up 5.13 percent, from $1.08 trillion in first quarter 2012 to $1.14 trillion in second quarter 2016. (See Figure 1, below.) The peak came in third quarter 2014, when inventory reached $1.22 trillion.

That’s not an entirely fair comparison, since inventory levels do tend to fluctuate depending on the quarter of the year. For example, third quarter inventory is usually higher than first quarter levels because many companies are preparing for holiday sales in the fourth quarter.

Still, even when you compare the same calendar quarters, you get the same upward trend. Inventory values in first quarter 2016 were 7.29 percent higher than first quarter 2012; they were 3.89 percent higher from fourth quarter 2012 to fourth quarter 2015.

Average inventory reported per filer, however—that’s a much more pronounced trajectory. Average inventory jumped 31.1 percent, from $331.9 million per filer at the start of 2012 to $435.4 million by second quarter 2016. (See Figure 2, below.)

Total inventory might be see-sawing slowly upward. Average inventory is much more on a steady march.

That said, drawing conclusions from the aggregate data here is somewhat dicey. Corporations build up inventory for all sorts of reasons; if you want to find omens of economic health, you’ll be on much firmer ground if you examine inventory fluctuations within one specific business sector and keep your predictions confined to that group.

Calcbench will try to do that more granular analysis in future posts but for now, that’s how the big picture looks for inventory levels: big, and getting bigger by the quarter.

FREE Calcbench Premium
Two Week Trial

Research Financial & Accounting Data Like Never Before. More features and try our Excel add-in. Sign up now to try the Premium Suite.