The determination of mean stock levels involves calculating the sum of inventory values at the beginning and end of a specific period, divided by two. For example, if a business begins a month with \$10,000 of merchandise and ends with \$12,000, the arithmetic mean would be \$11,000.
Effective measurement of typical stock investment provides insights into operational efficiency. A lower value, relative to sales, indicates effective inventory management, reducing storage costs and minimizing the risk of obsolescence. Understanding typical stock investment also supports financial planning, informing purchasing decisions and working capital management.
