What is Inventory?

Inventory or Stock refers to the goods and materials that a business holds for the ultimate purpose of resale. It is a Current Asset on the Balance Sheet. Most manufacturing organizations usually divide their “goods for sale” inventory into:

  • Raw Materials – materials and components scheduled for use in making a product
  • Work in Process or WIP – materials and components that have begun their transformation to finished goods
  • Finished Goods – goods ready for sale to customers
  • Goods for Resale – returned goods that are salable
  • Stocks in Transit
  • Consignment Stocks

In most businesses, the “bodies are buried” in the inventory and the A/R. For example, Pre-billed goods should be taken out of inventory and put into A/R or they can be double counted. In addition, inventory not readily saleable in the next 12 months should be written down in value.

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Inventory Tips to Avoid Cash Flow Headaches When Tariffs Cause Pricing Volatility

Inventory Tips to Avoid Cash Flow Headaches When Tariffs Cause Pricing Volatility

When tariffs are imposed it naturally causes an increase in the costs of doing business. This cost shift causes volatility affecting the market in unexpected…
What You Are Afraid to Ask About Inventory Financing

What You Are Afraid to Ask About Inventory Financing

Supply chain finance allows a supplier to leverage an alternative lender to create cash flow on credit, secured by the invoices in accounts receivable that…

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