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How Business Inventory is a Valuable Business Asset

Business industries that sell goods more than services regard these goods as valuable business assets. In the same way, a business inventory comprises a large percentage in the sales and the operations of the company. Proper management of inventory is necessary in order to gain returns from this asset.

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Due to the uncertain demand in the market, products are purchased and stored in the hopes of selling them in the near future. To track inventory of these products, an inventory control guide is essential to aid in the company’s inventory management. Learn more about the value of inventory as a business’ asset by looking into the information and the inventory templates presented on this website.

Why Is Inventory a Valuable Asset to a Business?

Inventory is a valuable asset to a business that should be managed and monitored with efficiency due to the following reasons:

  • It adds to the worth of your company. Since an inventory is an asset, it essentially adds value to your company. Inventory as an asset forms part of the capital investment in terms of the net income gained from sale of inventory.
  • It aids in reducing business tax. Inventory related costs such as buying and selling are deductible expenses which means it can help your company reduce taxes.
  • It avoids issued with internationals standards. Proper management of inventory with the use of the free inventory templates can keep your from having legal problems with the International Reporting Standards.
  • It comprises a major part of your income. As indicated on the sales section on the inventory templates in DOC format, your business’s inventory covers both the profit and the cost of the products in the income statement, especially for business industries dealing with goods.
  • It is viable as collateral for a business loan. Inventory can be used as a collateral for a loan like inventory financing due to its value as an asset of a business.

Inventory Categories

There are two types of inventory a business usually has with sub-types and related information as depicted on the printable inventory templates on this website, as follows:

  • Product Inventory – Most of the samples in inventory templates on this website show this kind of inventory since these are goods purchased or produced with the intention of selling them to consumers. Under this inventory category are the following:
    • Raw Materials – This pertains to source materials used for producing the goods to be sold.
    • Work-in-Process – This inventory type comprises of the goods in the middle of the production process.
    • Finished Goods – These items are completed products and are ready for sale or for delivery.
  • Office Inventory – Inventory under this category include the office supplies and equipment used by employees in making the company reports to be submitted to the top management. Cleaning and computer supplies also form part of this inventory category. It’s basically those supplies not for sale.

Inventory as an asset must be efficiently managed and tracked in order to accurately record all profits and costs associated with inventory. There are tools you can use like the inventory templates on this website to maintain the accuracy in recording inventory information which is a valuable business asset.

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