What Are Inventories? What Usually Happens to Inventories at the Beginning

question 109

Essay

What are inventories? What usually happens to inventories at the beginning of a 'contraction' and what usually happens to inventories at the beginning of an 'expansion'?
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Definitions:

Margin Of Safety

The excess of budgeted (or actual) dollar sales over the break-even dollar sales.

Variable Expenses

Expenses that fluctuate based on the level of a company's operations.

Fixed Expenses

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Net Income

The sum of a company's income once all costs and taxes are subtracted from its total revenue.