Understanding Inventory, the Dollars and Sense: A Guide for Non-Financial Managers

Despite how large or small the number may be on the Balance Sheet, inventory is arguably the most important item in the financial statements. Many non-Financial Managers do not fully understand the impacts of their inventory management decisions on the bottom line of their company. In this discussion we will focus on the tie between inventory management and the financial statements. We will explore how inventory is captured, how it is valued and the impacts of inventory management decisions on the bottom line. While this is not a technical discussion, I am assuming that you have some basic knowledge about what financial statements look like and about their main components (assets, liabilities, equity, income and expenses).