Inventory
 |
Definition of 'Inventory'The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners. |
 |
Investopedia explains 'Inventory'Possessing a high amount of inventory for long periods of time is not usually good for a business because of inventory storage, obsolescence and spoilage costs. However, possessing too little inventory isn't good either, because the business runs the risk of losing out on potential sales and potential market share as well.Inventory management forecasts and strategies, such as a just-in-time inventory system, can help minimize inventory costs because goods are created or received as inventory only when needed. |
Related Definitions
Articles Of Interest
-
Analyzing Retail Stocks
To analyze retail stocks, investors need to be aware of the most common metrics used. Find out what they are. -
Measuring Company Efficiency
Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period. -
Inventory Valuation For Investors: FIFO And LIFO
We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line. -
Understanding The Cash Conversion Cycle
Find out how a simple calculation can help you uncover the most efficient companies. -
Read This Before You Sell
There are five tell-tale signs that show when to walk away from an investment. -
What are the generally accepted accounting principles for inventory reserves?
As with most matters related to generally accepted accounting principles (GAAP), accountants assigned with the task of applying GAAP to inventory reserves often use a significant amount of personal ... -
Is an earnings surprise priced into the opening value by market makers or does the buyer/seller response drive the price?
An earnings surprise is an event where the earnings of a company are greater or lower than the predictions put forth by analysts, usually by a relatively large margin. Depending on the earnings ... -
Depreciation: Straight-Line Vs. Double-Declining Methods
Appreciate the different methods used to describe how book value is "used up". -
Financial Statement: Extraordinary Vs. Nonrecurring Items
When it comes to analyzing a company, successful analysts spend considerable time differentiating between accounting items that are likely to recur going forward from those that most likely will ... -
The Basics Of A Financial Analysis Report
Running financial analysis on a company or industry is a key skill every investor must learn and understand how to undertake without which an ineffective financial report and investment recommendation ...
Free Annual Reports
