Inventory

Dictionary Says

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 Says

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.

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Related Definitions

  1. Economic Order Quantity - EOQ

    An ...
  2. Carrying Cost Of Inventory

    This is the cost ...
  3. First In, First Out - FIFO

    An ...
  4. Inventory Turnover

    A ratio showing ...
  5. Shrinkage

    The loss of ...
  6. Physical Asset

    An item of ...
  7. Highest In, First Out - HIFO

    In accounting, ...
  8. Overadvance

    A short-term ...
  9. Periodic Inventory

    A method of ...
  10. Just In Time - JIT

    An inventory ...

Articles Of Interest

  1. 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.
  2. Understanding The Cash Conversion Cycle

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  3. Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  4. Analyzing Retail Stocks

    To analyze retail stocks, investors need to be aware of the most common metrics used. Find out what they are.
  5. Read This Before You Sell

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  6. Operating Performance Ratios: Operating Cycle

    An indepth look at the Operating Cycle Ratio, its calculations and comments.
  7. What are the generally accepted accounting principles for inventory reserves?

  8. Is an earnings surprise priced into the opening value by market makers?

  9. Revenue Projections Show Profit Potential

    Examining how a company makes money can offer clues about its earnings potential.
  10. Spotting Profitability With ROCE

    This straightforward ratio measures whether a company is efficient, money-making or neither.

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