Balance sheet - assets
Inventory
Records goods purchased or produced that will be sold or consumed in operations on the balance sheet. An asset is not automatically cash or market value: it is a controlled resource whose quality depends on liquidity, recoverability, turnover, impairments and
Inventory
inventory · Balance sheet - assets
- Definition
- Records goods purchased or produced that will be sold or consumed in operations on the balance sheet. An asset is not automatically cash or market value: it is a controlled resource whose quality depends on liquidity, recoverability, turnover, impairments and usefulness for generating future sales.
- Calculation
- Raw materials + work in progress + finished goods - write-downs/allowances.
- Uses
- Useful for assessing liquidity, capital intensity and balance-sheet quality. Especially important in retail, industrials, banks, insurers, REITs and asset-heavy models; it can understate internally built software, brands or networks. Cross-check turnover, impairments, age, ROA, ROIC and cash flow.
