Category Archives: Inventory
Cash flow analysis is so crucial because cash is king! When evaluating a company’s performance, most stakeholders whether internal or external, are interested in how well the company is generating cash. Having a strong grasp of cash flow analysis can give you great insights into the company’s past, present and future performance. There are a few types of cash flow analysis and in a series of tutorials we will explore the cash flow statement, cash flow ratios, discounted cash flow and free cash flow.
For merchandisers, manufacturers and wholesalers, inventory is often times the largest asset item represented on the balance sheet as a current asset. It is considered one of the more liquid assets because the basic assumption is that inventory owned by a company will be sold in the near future and converted to cash (the most liquid of any asset type). Inventory includes items that are ready for sale (finished goods), items in the process of being produced (work in progress) and raw materials that will be used to produce the final goods.