Getting Control of Your Inventory

To a CFO, inventory is often a line item on the balance sheet that measures inventory turns against the income statement (cost of goods sold). This COGS analysis provides an overall view of how much inventory is held across the company’s supply chain. What it doesn’t provide, however, are the reasons why the inventory is there in the first place or whether the return on each inventory dollar is sufficient. Is there too much inventory at the store? Is there too little at the warehouses? Answers to these questions begin with understanding what drives inventory levels.

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