The term inventory refers to the raw materials used in production as well as the goods produced that are available for sale. A company’s inventory represents one of the most important assets it has because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders. There are three types of inventories, including raw materials, work-in-progress, and finished goods. It is categorized as a current asset on a company’s balance sheet.

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