Work In Progress - WIP

AAA

DEFINITION of 'Work In Progress - WIP'

Material that has entered the production process but is not yet a finished product. Work in progress (WIP) therefore refers to all materials and partly finished products that are at various stages of the production process. WIP excludes inventory of raw materials at the start of the production cycle and finished products inventory at the end of the production cycle.


Also referred to as "work in process."




INVESTOPEDIA EXPLAINS 'Work In Progress - WIP'

For accounting purposes, work in progress is considered as a current asset on the balance sheet. WIP is generally valued higher than raw materials, but significantly lower than finished products.


Most companies strive to keep the actual amount of work in progress as low as possible, so as to reduce the amount of capital tied up in the production or manufacturing process. Another reason to keep WIP low is to reduce the risk of obsolescence, especially in fast-moving sectors such as technology and consumer electronics.

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Obsolescence Risk

    The risk that a process, product or technology used or produced ...
  3. Asset

    1. A resource with economic value that an individual, corporation ...
  4. Inventory

    The raw materials, work-in-process goods and completely finished ...
  5. Raw Materials

    A material or substance used in the primary production or manufacturing ...
  6. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
Related Articles
  1. Working Capital Works
    Insurance

    Working Capital Works

  2. Reading The Balance Sheet
    Investing Basics

    Reading The Balance Sheet

  3. The Working Capital Position
    Investing Basics

    The Working Capital Position

  4. Inventory Valuation For Investors: FIFO ...
    Fundamental Analysis

    Inventory Valuation For Investors: FIFO ...

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center