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It is my understanding that good manangement will result in a company's inventory increasing somewhat in line with sales. I notice in my CISCO SYSTEMS annual report, that inventories increased 42% while sales increased 31%. On page 38 of the annual report, inventories are broken down further into 4 sub-categories. The category that stands out is the Finished goods. It increased more that 400%

Is it true that inventory should not increase more than sales? Is the finished goods sub-category the one that really matters most? If so, is a 400% increase in finished goods vs 31% increase in sales a reason for concern?

Any help in understanding this is appreciated.

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