Inventory Goods/Assets

What is an Inventory Asset?

What is an inventory asset? Inventory assets are goods or items of value that a company plans to sell for profit. These items include any raw production materials, merchandise, and products that are either finished or unfinished. They also include any kind of securities that a stock broker or dealer buys and then sells. They are considered a part of your business assets. Basically, inventory assets are your saleable inventory. Excess inventory, however, can also become a liability, as it may cost resources to store, and it may have a limited shelf life, meaning it can expire or become out of date. Examples include food which can eventually spoil, computers which can become obsolete, securities that lose too much of their value, or clothing that can go out of style or become no longer fashionable. Your business may be forced to either dispose of these assets or sell them at a loss. Therefore, to keep inventory from becoming a liability or loss, a business must not store too much at any time. However, at the same time, your company also does not want to have too little inventory, as shortages can cost sales. This is because it can drive customers to other businesses that can meet their demands and can also decrease your business's reputation by creating a dissatisfying experience for your customers.