Chapter 3. Valuing Inventories for the Balance Sheet
Particularly for a business that manufactures or resells tangible goods, the size of the company’s inventory has a powerful influence on its profitability. The inventory of goods is often the company’s major current asset and, therefore, contributes heavily to the company’s worth. Because the cost of goods sold depends on the value of the inventory, it also figures into the company’s gross profit and its net income.
Because inventory is so important to a company’s worth and profitability, you have several ...
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