TABLE OF CONTENTS The current assets section of the balance normally has three dominant sections, but always be prepared for the odd surprise (Figure 16.1).
Our first step as an analyst should be to refer to the financial statement notes to get a further analysis of this figure.
| Note | Inventory is the international equivalent of the term 'stock' |
17. Inventories
| 30 Jun 2006 '000 | 30 Jun 2005 '000 | |
|---|---|---|
| Finished goods and goods for resale | 5,419 | 8,133 |
| Raw materials and consumables | 710 | 598 |
| 6,129 | 8,731 |
Major categories include:
Finished goods
Work in progress
Raw materials
Consumables.
For some business types, such as house builders, stock will be the most significant number on the balance sheet whereas for an advertising agency it would be insignificant. When stocks are material to the financial statements their impact is pervasive as they have a direct relevance for the balance sheet, cash flow statement and the profit and loss account (remember opening and closing stocks are a key part of cost of sales).
Stock valuation and classification can both be of interest when interpreting the figures. A simple...
