Financial Market

Stock & Inventory

Presented by: Group 3
 Objectives
At the end of the lesson you will be able to:
• Learn the concept, forms and functions of
inventory
• Understand why inventory is a current asset
• And to know the importance, advantages &
disadvantages
 Concept of Stock & Inventory
Inventory
-refers to all the items, goods, merchandise, and
materials held by a business for selling in the
market to earn a profit.
Stock
is the supply of finished goods available to sell
to the end customer.
 Example
Here is how some items pertaining to production of a ballpoint pen would be categorized in
inventory or stock.

• All raw materials used to create the pen,

• Finished pens
such as metal and plastic to produce the
parts, as well as ink.
• Pens stored in
• Finished product parts such as ink tubes, warehouse
pen exteriors, and open and close pieces
• Packages or pens that
are ready to deliver
• Packaging materials to create packages for
pens
 Forms of Inventory

1. Raw Materials – stocks of the basic material inputs into the organization’s
manufacturing process.
2. Work-In Progress – As labour and other materials are added to the raw material
inputs, they are transformed into work-in-progress inventory.
3. Finished Goods – When the total production transformation process is complete,
work-in-progress goods are made into finished goods.
4. MRO (Maintenance, Repair & Operation) – inventory used to for maintenance
and repair parts.
5. Resale Items – items used for resale to the public or industrial customers.
 Functions of Inventory

(1) To provide and maintain good customer service;

(2) To smooth the flow of good through the productive process;

(3) To provide protection against the uncertainties of supply and

demand; and

(4) To obtain a reasonable utilization of people and equipment.

 Inventory is the asset held for sale in
Is Inventories normal routine operations; therefore,
a Current inventory is considered a current asset
Asset? because the company intends to
process and sell the inventory within
twelve months from the reporting date
or, more precisely, within the next
accounting year.
 Why
inventory Inventory management helps companies
management identify which and how much stock to
important? order at what time. It tracks inventory
from purchase to the sale of goods. The
practice identifies and responds to trends
to ensure there’s always enough stock to
fulfill customer orders and proper warning
of a shortage.
 Advantages & Disadvantages
Save Money
- a carefully managed inventory system
Shifting Customer Demand
- because tastes and circumstances are
decreases the number of products that
constantly changing, the inventory you
need to be stored, thereby allowing
have on hand today may not be the
businesses to use fewer inventory
inventory your customers want tomorrow.
locations or small storage space.

Reduce the Risk of Out of Stock Inventory Takes Up Space

Problems
- Effectively managed inventory systems
that use perpetual counting keep up with
the most current numbers of stock
available.
- the more inventory you have, the more
you must store. If your storage space is
limited, you may find it difficult to find
space for items you need.
 References
https://oneviewcommerce.com/blog/inventory-vs-stock/#:~:text=In%20summary%2C%20stock%20is%
20the,not%20all%20inventory%20is%20stock
.

https://www.zoho.com/inventory/guides/inventory-definition-meaning-types.html#:~:text=Inventory%20r
efers%20to%20all%20the,be%20treated%20as%20an%20asset
.

https://www.wallstreetmojo.com/is-inventories-a-current-asset/

https://baelearn.uncg.edu/wordpress/scm432/week-ten-scm-652/function-and-form-of-inventories/

https://www.netsuite.com/portal/resource/articles/inventory-management/inventory-management.shtml
#:~:text=Inventory%20management%20helps%20companies%20identify,proper%20warning%20of%2
0a%20shortage
.
 Prepared by:

Justine Marie Michelle Rufa Mae Marisol

Bautista Caballa Cayabyab Cuevas
Sophia Bradecina De Flordeliza Arwhin Ma. Vanessa Salazar
Nieva Ypilan Villanueva
Thank you
for
Listening!