Inventory
It encompasses all the goods a company holds with the intention of sale or use in production, making it a critical component of business operations and financial management.
Proper inventory management balances the need to meet demand without incurring unnecessary costs or losses from overstocking or stock obsolescence. Various management techniques, such as Just-In-Time (JIT), First In First Out (FIFO), or Last In First Out (LIFO), are employed to optimize inventory levels and reduce holding costs. The state of a company's inventory can significantly affect its cash flows, operational efficiency, and profitability.
Effective inventory control is essential for maintaining product availability and customer satisfaction while minimizing costs in the manufacturing, retail, and distribution industries. Inventory valuation and management are also important for financial reporting, affecting metrics such as cost of goods sold, gross margin, and net income.
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