merchandise or supplies on hand or in transit at a particular point in time. The three types of inventory for a manufacturing company are raw materials, work-in-process, and finished goods. Included in inventory are (1) goods in transit for which title has been received and (2) goods out on consignment. Inventory is recorded in the accounting records typically at the lower of cost or market value. An inventory count usually occurs at year-end to assure that the physical quantity equals the quantity per books. At the end of the accounting period, beginning and ending inventories are presented in the income statement in the cost-of-goods-sold calculation, while ending inventory is shown in the balance sheet under current assets.
Corporate finance:value of a firm's raw materials, work in process, supplies used in operations, and finished goods. There are a number of inventory valuation methods; the most widely used are First In, First Out (FIFO) and Last In, First Out (LIFO). Financial statements normally indicate the basis of inventory valuation, generally the lower figure of either cost or current market price.
Personal finance:list of all assets owned by an individual and the value of each, based on cost, market value, or both. Such inventories are usually required for property insurance purposes.
Corporate finance: value of a firm's raw materials, work in process, supplies used in operations, and finished goods. Since inventory value changes with price fluctuations, it is important to know the method of valuation. There are a number of inventory valuation methods; the most widely used are first in, first out (FIFO) and Last In First Out (LIFO), Financial statements normally indicate the basis of inventory valuation, generally the lower figure of either cost price or current market price, which precludes potentially overstated earnings and assets as the result of sharp increases in the price of raw materials.
Personal finance: list of all assets owned by an individual and the value of each, based on cost, market value, or both. Such inventories are usually required for property insurance purposes and are sometimes required with applications for credit.
Securities: net long or short position of a dealer or specialist. Also, securities bought and held by a dealer for later resale.
supply of goods or materials on hand. In manufacturing, inventory consists of raw materials, work-in-process, and finished goods. In wholesaling and retailing, inventory is the stock of merchandise on hand. In direct marketing, inventory may refer to direct- mail package components that are available for mailing when needed. In the broadcast and print media industry, inventory is the time or space available for sale to advertisers. In magazine publishing, inventory is the number of copies of each issue available for distribution.
An ample inventory ensures that sales will not be lost or deadlines missed but can require a substantial cash investment in both material and storage space. There are also risks associated with excessive inventory, such as a change in circumstances that reduces or eliminates demand for an item in inventory or that renders the item obsolete or illegal, or the risk of loss due to theft, fire, aging, and so forth. The costs and risks must be weighed against the cost of lost sales and missed deadlines to determine the optimal inventory level.
property held for sale or to be used in the manufacture of goods held for sale. Does not qualify for capital gains tax treatment.
To a builder, property under construction and property completed are inventory. To a subdivider, vacant lots are inventory.
