Thursday, July 9, 2015

7/9/15 Why I am not liking inventory to sales ratio

this is through April
I don't like this increase.  Do probably don't remember the business stuff from the nineties.  One successful business concept was JIT - Just in Time.  This allowed for much less investment, and thus financing, to go into inventories.
This seems to me to be another example of the end of our magical time of ever decreasing interest rates to spur ever increasing credit creation.  I just can't see a way to explain this increase as a good thing.
Optimists say it is because businesses believe that they need to stock up on inventory because very soon there is going to be a explosion of economic growth and they need to be ready for it.
That reasoning makes me want to puke.  You keep your inventories tight no matter what.  That is what JIT was all about.   

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