In accounting, inventory refers to the assets a company holds with the intention of selling them as part of its regular business operations.
This includes finished goods ready for sale, products currently in production, and raw materials used in the manufacturing process. Inventory is a key component of a company’s current assets and is vital for determining cost of goods sold (COGS) and overall profitability.
Proper inventory management helps ensure that a business can meet customer demand without overstocking or tying up excessive capital. Tracking inventory accurately is essential for financial reporting and operational efficiency.