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Inventory to Sales Ratio or I/S ratio is the ratio of companies' inventory to companies' sales. It measures the percentage of inventory companies, operating in the United States, have on hand to support their current amount of sales. This economic indicator is released in the Monthly Wholesale Trade Report, which is the result of a monthly survey of about 4500 wholesale U.S. merchants. Inventory and sales are estimated with data from three surveys: the Monthly Wholesale Trade Survey, the Monthly Retail Trade Survey, and the Manufacturers' Shipments, Inventories, and Orders Survey.
An increasing Inventory to Sales ratio is generally a bad sign for the economy, it could be the result of a decrease in sales (Less revenue for the companies) or an increase in the companies' inventory (Higher costs to maintain the extra inventory), and it may indicate that there are supply/demand imbalances in the economy.
An inventory to sales ratio value equal to one means that the current inventory levels correspond to one month of current demand.
Most economists, as well as the Conference Board consider the Inventory to Sales Ratio as a lagging indicator.
The I/S ratio is mainly used to predict the future values of the GPD (Gross domestic product).
During the last recession, inventory to sales ratio increased from a value that ranges between 1.25 and 1.31 to a value of 1.48.
Inventory to Sales Ratio for Total Business data is downloaded from the federal reserve bank of St. Louis and it is released by the U.S. Department of Commerce: Census Bureau. The data is seasonally adjusted, released monthly and it spans from January 1992 to present.
The symbol name of this economic indicator is "^Inventory_Sales_Ratio".
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