Answer to Question #7244 in Macroeconomics for Jahangir Badar
if the inventory value is negative than what is the interpretation??
1. Sometimes negative inventory is simply a timing issue. For example, if materials are coming right out of manufacturing and into an outbound shipment, the shipment transaction may be completed before the production-reporting transaction if the production run is still in process. This will result in a temporary negative balance until the production quantity is reported.
2. if you aren't keeping up with inventory and sold more goods than you originally you had, the inventory goes into the negative
3. A condition that exists when inventory count suggests that there is less than zero of the item in question. This is a common temporary inventory condition that occurs because of timing issues in the transfer of product or the importer reporting of the count when multiple locations are used for the same product