Investing Basics – Feel free to ask the most basic questions

Query regarding Purchase of stock-in-trade

I am not an accounting expert so get confused at times because of accounting treatments. Please find below a snapshot of a jeweler retail company for Q2 FY23.

The sales have increased slightly YoY, but profit has decreased from Rs 10.8 crs to Rs 8.3 crs YoY for Q2 FY 23.

On looking at expenses, there is considerable increase in Purchases of stock-in-trade (Rs 401 crs vs Rs 312 crs YoY).

Queries:

• Is this purchase of stock-in-trade basically unsold inventory of finished products of last quarter and carried forward to this quarter?

• Is purchase of stock-in-trade not same as inventory?

• 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?

• 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?

• How is purchase of stock-in-trade different from finished goods?

• 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.