Inventory is an extremely difficult part of the balance sheet to budget, because of the multitude of individual inventory items, as well as the impact of seasonality, purchasing volumes, product customization, and other factors. Many companies do not attempt a detailed budgeting effort in this area, instead opting to back into an inventory budget by applying the existing inventory turnover rate to the projected sales level. Although this approach may work in a general sense, a company’s investment in inventory [...]
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