(1) This formula illustrates the quantitative change in stocks for the current period, as well as a comparison of stocks in the current period with stocks in the previous period.
(2) This formula illustrates the change in stocks specifically in the current period, regardless of inventory balances from the previous period, a comparison of sales and production.
Thus, we understand that at the beginning of the current year, first of all, the reserves of the previous year were sold, and then new reserves of the current one were formed and sold. Thus, there is a transformation of stocks, their updating.
The revenue of the clothing company in the current period is $ 20,000, the change in stocks is $ 7,000, the cost of intermediate goods used for the production of clothes is $ 15,000 GVA = 20,000 + 7,000 -15,000 = 12,000