• Inventories are raw materials used to produce goods, as well as goods available for sale.
  • It is classified as a current asset on the company’s balance sheet.
  • The three types of inventory include raw materials, work in progress, and finished goods.
  • Inventories are valued in one of three ways, including first in, first out; “last in, first out” method; and the weighted average method.
  • Inventory management allows businesses to minimize inventory holding costs as they create or receive goods as needed.