What is Inventory?
Nexa Consultancy | Startup & Finance Glossary
Inventory refers to the goods and materials that a business holds for the ultimate purpose of resale. For a manufacturing company, it includes raw materials, work-in-progress goods, and finished goods. For a D2C brand, it is the stock of products ready to be sold.
For Startups: For startups that sell physical products, inventory is a major current asset on the balance sheet. Managing inventory is a critical balancing act. Holding too much inventory ties up cash and increases storage costs, while holding too little can lead to stockouts and lost sales. Proper inventory management is key to a healthy cash conversion cycle.
Example: An e-commerce startup's inventory consists of 500 units of a product that it purchased from a supplier and is holding in a warehouse, ready to be shipped to customers.