1. Inventory change=last period's ending inventory- the current period's ending inventory.
2. Change in inventory= production of the firm during the year- sale of the firm during the year
No doubt in (1) but in (2) "production of the firm during the year- sale of the firm during the year" tells about remaining part which is unsold. How could we say unsold product is "change in inventory"?
Numerical example to this?
Gross value added (GVA) = Value of sales by the firm + Value of change in inventories ? Value of intermediate goods used by the firm.
Dear student,
It is true that (production of the firm during the year - sale of the firm during the year) gives unsold product which can also be called change in inventory. Let us understand this with the help of an example:
Inventory at the beginning of the year = Rs. 200
Production by firm during the year = Rs. 300
Sale of firm during the year = Rs. 100
Change in inventory = production of the firm during the year - sale of the firm during the year
= 300 - 100 = Rs. 200
Inventory at the end of the year = inventory at the beginning of the year + change in inventory
= 200 + 200 = Rs. 400
Gross value added (GVA) = Value of sales by the firm + Value of change in inventories - Value of intermediate goods used by the firm
Regards.
It is true that (production of the firm during the year - sale of the firm during the year) gives unsold product which can also be called change in inventory. Let us understand this with the help of an example:
Inventory at the beginning of the year = Rs. 200
Production by firm during the year = Rs. 300
Sale of firm during the year = Rs. 100
Change in inventory = production of the firm during the year - sale of the firm during the year
= 300 - 100 = Rs. 200
Inventory at the end of the year = inventory at the beginning of the year + change in inventory
= 200 + 200 = Rs. 400
Gross value added (GVA) = Value of sales by the firm + Value of change in inventories - Value of intermediate goods used by the firm
Regards.