Inventory refers to all of the things, goods, commerce, and materials held by a company for the purpose of reselling in the market for a profit.
Businesses manually do an inventory count at the conclusion of each accounting period, which is commonly quarterly or yearly, to verify that all accounting records are up to date and correct. Companies that do daily inventory counts are said to take perpetual inventory since their count is always up to date.
Having too much inventory is problematic because you risk being trapped with items that are outmoded or past their prime. You may have to mark it down in order to sell it, limiting your profit margin.
Four types of inventory
1. Raw Materials
2. Work-In-Process (WIP)
3. Finished Goods
4. Maintenance, Repair, and Overhaul (MRO).