how can one draw conclusion from the given stocks values of raw material ,stores etc.?

Question

there are various types of stocks in a compan like raw material, stores & spares, stocks in process, finished goods , goods in transit, etc. all these have opening stock & closing stocks given in the balance sheet .and also annual consumption value of some of these is given the P& L a/c like of raw material and stores.How can one draw conclusion from the figures given over a time period of 3-4 years?

Answer 1

Think this through logically:
If raw material inventory is high, ask why? Is it because they are not producing as much as they had predicted? Is it because of inefficient purchasing decisions? Is it because they are stockpiling inventory in anticipation of higher prices? Are they stocking obsolete inventory?

Look at sales for the same period: Up, down, or flat?

You need to look at the complete picture in order to draw intelligent conclusions.