Changes in inventories (constant LCU)

Inventories represent the essential buffer that businesses maintain to handle variations in their production processes and market demands, encompassing not only finished goods but also raw materials and work-in-progress items. Tracking these fluctuations in constant local currency allows for a clearer understanding of real-term shifts, eliminating the distortions caused by inflation or currency depreciation. This metric is pivotal for assessing a company’s operational efficiency and sales forecasting accuracy, as it reflects the balance between supply and immediate market needs. A significant rise or decline in inventory levels can signal impending changes in consumer demand trends, production capabilities, or even broader economic conditions, making this indicator invaluable for strategic planning and resource allocation. Source: