Can anyone explain why inventory to sales is lagging indicators?
Inventory is leading indicator so i think inventory to sales is a leading one?
You build up inventory TODAY to be able to satisfy Sales IN A COUPLE OF MONTHS. (or maybe couple of DAYS).
If you built up your inventory today anticipating higher sales in 3 months from now - your Inventory to Sales would GO UP.
In say 3 months your expected Sales did not materialize - your Sales figures would still remain suppressed - so your Inventory to Sales will not go DOWN as you expected it to. Then you would start to reduce the purchase of inventory, write off inventory etc. So there is always a lag between your inventory and your Sales.