b a c kn e x th o m e
1998 McGraw-Hill Ryerson Limited, Canada
Importance Of Inventories
Inventories typically represent the largest current assetof manufacturing and retail firms. Inventory should beconsidered a “high-risk” asset.
For many companies, inventories are asignificant portion of total assets as well.
Inventory accounting methods and managementpractices can become profit-enhancing tools.
Inventory effects on profits are more noticeablewhen business activity fluctuates
Topics: Types of inventory, Basic cost flowassumptions,Valuation issues and Estimation methods