I am looking for best practice about Income Statement position "change in inventory". This is typical for production companies, when they sell products made in period before, and there is impossible to relate COGS in current period to them. The question is, what are typical assumptions with this position?
Currently, I am modeling 2 companies where this position historically is significant - like 120m sales include 15m change in inventory.
My ideas are:
a) Assume that in future periods change in inventory will be 0 because company always wants to produce that much as much can sell
b) Take proportion from previous periods and assume future sales will look the same (15/120).
c) Calculate this position as an accounting rule (this usually brings different result than historically - like 2/120)
*Sorry for my CEE English style