Inventory is such an expensive asset that it may account for as much as 50 percent of a firm's invested capital. The statement is true.
what is Inventory?
Inventory is a crucial asset for every business. It is described as the assortment of raw materials or completed products that a firm maintains throughout the usual course of operations. Raw materials, also known as any resources, required to manufacture completed items, work-in-progress (WIP), and finished goods, or those that are prepared for sale, are the three main types of inventories.
As was already said, inventory acts as a stopgap between order fulfilment and production and is recorded as a current asset on a company's balance sheet. When an item in inventory is sold, its carrying cost is transferred to the income statement's cost of goods sold (COGS) category.
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