Merchandise bought for resale or supplies and raw materials purchased for use in revenue-producing operations. Changes in inventories could be a clue to a company's changing circumstances or fortunes. For example, rising inventories might indicate that sales are slowing. Remember, holding inventory costs money, both in terms of interest on capital tied up in widgets until they are sold, and in terms of expenses associated with warehousing all those widgets until they can be unloaded.



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