The concept of stock and inventory is a complicated item, most people and even some persons inside the organization are not much aware about these terms. There is an extreme correlation between stock and inventory , even though when the evaluation takes place each term would have its own nature of difference.
What is Inventory?
- It refers complete list of items or goods that are in multiple juncture of production.
- It include raw material, work-in-progress and finished goods.
What is Stock?
- It is the final or finished goods applicable for sale.
- consists of any part of raw material (spare parts ) available for sale to the ultimate market or customer .
Major distinction between Inventory and Stock:
|Definition||Inventory refers to the value of a sum of finished products, work-in-progress products, and raw materials.||Stock refers to the products sold that could be in any form to the customer.|
|Context||It is used in an accounting context.||It is used in a business context as it directly affects the top line of the company.|
|Use||Accounting sense||Business sense|
|Valuation||Inventory is valued at the cost incurred by the company using FIFO (First In First Out) inventory methods, LIFO (Last In First Out) inventory, and Average Cost.||It is valued at market value i.e., the selling price at which it is sold to the customers.|
|Frequency||It is valued just before the end of a financial reporting period. It is valued infrequently as compared to stock.||It is valued at quite frequent intervals and sometimes even daily.|
|Example||Cars as well as spare parts sold by a car dealer to its customers||Biscuits sold by a biscuit manufacturing company to its customers|
An utmost care must be taken for managing the inventory. It is a tactic zone in logistics and itself fabricate can a comprehensive collision with the supply chain management.
Eventually value of stock is the paramount for capturing the market than valuation of inventory. Because, stock is typically coupled with the whole customers, whereas inventory is associated with the firm itself..
Arjun A R