Inventory

Inventory (often called “stock” in the UK) is the goods and materials your business holds to sell, or to use in making what you sell. It appears on the balance sheet as a current asset and has a direct impact on cost of sales, cash flow and profit.

What typically counts as inventory:

• Goods purchased for resale.
• Raw materials and components.
• Work in progress.
• Finished goods.
• Packaging and consumables needed to get goods ready for sale.

Inventory is measured at cost, including amounts needed to bring items to their current condition and location; if the expected selling price (after selling costs) is lower, you use that lower figure. Common costing methods include FIFO and weighted average—choose one suitable for your business and apply it consistently; write down damaged, obsolete or slow‑moving items.