The
raw materials and the products made from them that a company possesses and intends to
sell in short order. It also includes raw materials that are in the process of being made into a final product. Inventory is considered an
asset on a
balance sheet, but because it comes with
costs (such as storage and spoilage), most companies seek to find a balance between having too much inventory, which comes with these costs, and too little, which could result in the company not filling orders for the product. Inventory may be
accounted on a
last-in-first-out or a first-in-first-out basis, which each has advantages and disadvantages. See also:
Just-in-Time,
Just-in-Case.