THE IMPACT OF ECONOMIC CONDITIONS ON THE SIZE OF INVENTORIES

For many businesses the investment in inventories, measured in absolute amounts or as a percentage of assets, turns out to be quite significant. According to recent statistics, the average nonfinancial US corporation has a larger percentage of its funds invested in inventory than in any other current asset. In fact, the role of inventories for many firms in the wholesale and retail trade is even more pronounced where many firms have in excess of 40 percent of their total assets invested in inventory.