Definition of Inventory | Raw Materials and Finish Products on Hand

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Inventory Definition

Term Definition
Inventory is the list of raw materials and/or finished products that a business has on hand for manufacture or sale.

Extended Definition
Small business owners need a method for keeping track of their inventory for many reasons. Too much inventory can hurt cash flow or result in losses due to outdated stock. Too little inventory can result in lost sales when a customer cannot purchase a desired item. Equally important is the need to track inventory to satisfy the Internal Revenue Service (IRS) requirements.

Related Article
What Is Inventory?

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