– Investing Basics – Feel free to ask the most basic questions

Patel_Bhai:

Queries:

Is this purchase of stock-in-trade basically unsold inventory of finished products of last quarter and carried forward to this quarter?
→ No

Is purchase of stock-in-trade not same as inventory?
→ No

If there is considerable increase in purchase of stock-in-trade then does it mean that the management expects higher sales and hence have increased the stocks?
→ No

Since stock is increased this time then does it mean that there will be comparatively less expenses in next quarter and hence more / increase in profits?
→ No

How is purchase of stock-in-trade different from finished goods?
→ See below note

Any reason why management opted to buy such high purchase of stock in trade? If they had less purchase of stock in trade then there would have been more profits.
→ See below note

Here is my understanding, which shall answer all the above questions:

Purchases of stock-in-trade: Includes cost spent to procure ready goods that are traded by the company.
Inventory: Includes all the elements of in-house manufactured goods – Raw Materials, WIP, channel stock (stock-in-trade), and Finished goods.

P.S: No accounting expert. Just another DIY investor.

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Investing Basics – Feel free to ask the most basic questions

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