Fundamentals of Business

Inventory in Accounting has only to do with

Inventory in Accounting has only to do with:
√ Law
FIFO - First In First Out In recording, for tax purposes, the first item in must be recorded before the last, there used to be LIFO - Last In First Out system, but has been abolished in most countries.
√ Circulating Assets
Inventory (stocks) for trade.
Items that have to be sold and the income generated used to meet liabilities.

Cash problems don't only affect small enterprises but also large as examples below illustrate.

11:00 - 28 March 2007 Nottingham Evening Post
Boots said today 300 jobs will be axed at its Beeston manufacturing site - and did not rule out more cuts in the future. The company is trying to save money after its D10 factory lost a major contract. Bosses hope most of the cuts will come through voluntary redundancy and natural wastage over the next 18 months. They said the decision was unavoidable after being told a contract to produce Clearasil, E45 and children's Nurofen for Reckitt Benckiser will end next February.

Reckitt Benckiser bought Boots Healthcare International division for £1.9bn in February 2006. Boots group director Paul Bateman said he was trying to find new contracts. "We're not taking this lying down, we're out there looking for more business, and we have been quite successful at that", he said. "It's quite a substantial blow in terms of our volume lost.

It is about 25% of the D10 work. To lose this is a big slug all in one go, even though it will not be lost until a year's time. "We're looking to bring other companies on to the site, and create employment. We have won some big orders. We already have one for toothpaste - we are already producing that for a leading company. Our best chance of success is to keep our operations at a good quality. We cannot give any guarantees for the future". Problem relying too much on one large customer