The inventory is the total value of the company’s raw materials, work in progress and finished goods. The inventory figures should be viewed and compared against historical inventory levels.
Low inventory levels
When current inventory levels are low in comparison to historical inventory levels, it may mean that the company is going through a period of sales growth. It could also mean that the company may not be able to produce as much as before.
High inventory levels
High inventory levels in compared to historical inventory levels may mean that its good are not being sold fast enough.
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