Work In Progress - WIP

Loading the player...

What is 'Work In Progress - WIP'

Work in progress (WIP) refers to 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."

BREAKING DOWN '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. Raw Materials

    A material or substance used in the primary production or manufacturing ...
  2. Value Chain

    A high-level model of how businesses receive raw materials as ...
  3. Goods In Process

    An inventory account that is usually identified on the balance ...
  4. Basic Materials Sector

    A category of stocks that accounts for companies involved with ...
  5. Product Life Cycle Management

    The observation of an item as it moves through the typical stages ...
  6. Inventory Management

    Inventory management is the overseeing and controlling of the ...
Related Articles
  1. Fundamental Analysis

    Work In Progress (WIP)

    Work in progress, also know as WIP, is an asset on the company balance sheet. WIP is the accumulated costs of unfinished goods that are currently in the manufacturing process.
  2. Mutual Funds & ETFs

    3 ETFs to Protect Your Retirement From Inflation (WIP, TIP)

    Learn more about three of the best inflation-protected exchange traded funds for investors who are retired or who are approaching retirement.
  3. Mutual Funds & ETFs

    4 Best High-Yielding Inflation Protected (TIPS) Bond ETFs (LTPZ, TIP)

    Learn how to protect a portion of your portfolio against the effects of inflation, and discover four different investments that can help you achieve that goal
  4. Economics

    How Does a Company Use Raw Materials?

    Raw materials are the basic components of a finished product.
  5. Investing Basics

    How to Analyze a Company's Inventory

    Discover how to analyze a company's inventory by understanding different types of inventory and doing a quantitative and qualitative assessment of inventory.
  6. Economics

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  7. Economics

    What is Involved in Inventory Management?

    Inventory management refers to the theories, functions and management skills involved in controlling an inventory.
  8. Economics

    Understanding Marginal Cost of Production

    Marginal cost of production is an economics term that refers to the change in production costs resulting from producing one more unit.
  9. Fundamental Analysis

    Advantages of Maintaining Low Working Capital

    Understand the benefits and advantages of maintaining low working capital as related to liquidity needs, capital allocation and operational efficiency.
  10. Economics

    Understanding the Product Life Cycle

    Product life cycle is the period of time during which a product is conceived and developed, brought to market and eventually removed from the market.
RELATED FAQS
  1. What is the difference between work in progress (WIP) and finished goods in accounting?

    Learn about the key features and differences between work in progress (WIP) and finished goods in terms of financial accounting ... Read Answer >>
  2. What is the difference between work in progress (WIP) and raw materials in accounting?

    Learn about the difference in inventory financial accounting between works in progress and raw materials, as reported in ... Read Answer >>
  3. Why is work in progress (WIP) considered a current asset in accounting?

    Find out why accountants consider work in progress (WIP) to be a current asset on the balance sheet for financial accounting ... Read Answer >>
  4. How is work in progress (WIP) typically measured in accounting?

    Understand what work in progress is and why a company would have this on its financials. Learn how work in progress is typically ... Read Answer >>
  5. How can I calculate funds from operation in Excel?

    Understand how the terms ''work in progress'' and ''work in process'' are used interchangeably to refer to items in the middle ... Read Answer >>
  6. Does working capital include inventory?

    Learn about inventory that is part of current assets and working capital, which is the difference between current assets ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center