Overtrading

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October 12, 2017 at 12:47 pm #410546
yceng1
Member
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Hi John,
May i know the reason why slowing down of inventory turnover is a sign of overtrading?
Sales increases rapidly when company is experiencing overtrading, the inventory drop faster than usual, is the inventory turnover supposed to increase?
Thanks.
October 12, 2017 at 6:49 pm #410649
John Moffat
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Have you watched my free lectures on the management of working capital?
As I explain in the lectures, it is common in a situation of over-trading for inventory levels to get higher than they should be and therefore for the inventory turnover to fall.
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