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ConceptsCoach, Certified Public Accountant (CPA)
Category: Finance
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Experience:  Chartered Accountant and MBA
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What impact does an organizations inventory have on its financial

Resolved Question:

What impact does an organizations inventory have on its financial statements, especially the balance sheet and the income statement
Submitted: 6 years ago.
Category: Finance
Expert:  ConceptsCoach replied 6 years ago.
Any word limit?
Customer: replied 6 years ago.
75 words
Expert:  ConceptsCoach replied 6 years ago.

Income statement which shows cost of goods sold will have Opening inventory + purchases - closing inventory. Inventory per se is not shown in income statement however and change in inventory will be reflected.


Inventory or stock is shown under current asset in the balance sheet of a company.


Accordingly if investment in inventories are high as compared to last year, if will affect both the income statement and the current assets of the balance sheet. If investments are kept low, chances are company might loose a potential order due to lack of stocked item.


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