Inventories for a Company - Essay Example

This is an investment by Intel in the future of the company and therefore would alleviate some concern on behalf of investors as to Intel's outlook for the long-term. Concerning where the cash was spent would be a fairly easy event based on the fact that the property, plant, and equipment value rose from $15,768 at the end of 2004 to $17,111 at the end of 2005. A closer look would show that since the property, plant and equipment are all stated at cost and that the land and buildings increased from 13,277 to 13,938 we can see that Intel has been investing cash into purchasing land and buildings and then filling those buildings with machinery and equipment which increased from 24,561 in 2004 to 27,297 in 2005.

That is a pretty significant increase in just a one-year time frame and would assist an investor in knowing that Intel is moving ahead with its long-term plans. A look at the last three years' accounts receivables shows that the changes have been widely fluctuating. In 2003 it was (430) changed to (39) and in 2005 went to (914). Looking a little further into this fluctuating shows that for the years of 2000 - 2002 this same category was (384), 1,561 and 30 respectively. These numbers represent a wide disparity and would need further explaining by the company as to the wide disparity.

Are these figures a worrisome category, possibly, but there could be a very valid reason why they fluctuate this way as well. Inventories for a company like Intel should be kept fairly low due to the short life span of the technology. What is bothersome about the amount of inventory Intel has on hand is that the raw materials, work in process and finished goods categories were all substantially higher in 2005 than in 2004. The total value went from 2,621 in 2004 to 3,126 in 2005. Looking over the inventory for the years since the turn of the century we see that Intel in 2000 had (731), in 2001 had 24, and in 2002 had (26), these numbers are substantially lower than the 2004 and 2005 numbers and could be cause for concern for an investor.