1. The materials owned and held by a business firm, including raw materials, intermediate products and parts, work-in-process, and finished goods, intended either for internal consumption or for sale. In this sense inventory differs from the fixed assets of a business, such as its office furniture, machinery, buildings, or land, which are referred to as "plant and equipment". 2. A detailed list of all items owned by an individual or firm, showing the value of each. Such inventories often are required for purposes of property insurance.
INVENTORY
Corporate finance: value of a firm's raw materials, work in process, supplies used in operations, and finished goods. Since 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.
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