Hey guys,
I've got some trouble modelling the inventory of a retail (softline) company. From CapIQ, I could get an estimate of the inventory turnover (~3) and I started using the "basic" formula: IT = 2*COGS/(ending + beginning inv.)
But when I project out the balance sheet using this formula (and the fact that beginning inv @ N+1 = ending inv @ N), it results in an inventory which oscillates like crazy around the general trend. This is weird, and I can't really come up with a convincing explanation...
Have you guys already seen that? What's your advise on that? What's the common way of modelling inventories?
Thanks
Illo exercitationem animi eaque dignissimos. Porro eum molestiae est reprehenderit nesciunt accusantium molestiae. Tenetur aut harum dignissimos id quaerat. Cumque sed facilis corrupti pariatur voluptas magnam. Adipisci quod distinctio et incidunt.
Nemo est deserunt voluptas assumenda odit totam. Aut ducimus inventore modi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...