inventory profit

Inventory Profit

In accounting, the increase in value of an asset during the time it is held. Inventory profit may occur through appreciation, but it is most often the result of inflation. That is, the increase in the asset's value is usually the result of the reduction in the value of the currency. Inventory profit is typically only a minor piece of a company's total profit. See also: LIFO, FIFO.

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inventory profit

Profit that results from the increase in value that assets undergo during the time they are held in inventory. Inventory profit, ordinarily due to general inflation, is not considered to be of high quality because it is incidental to the firm's main business. See also first-in, first-out, last-in, first-out.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.