The definition of inventories refers to the goods that a company has at its disposal for transformation, incorporation into the production process or sale. Stock is also known by the term stock.
The concept of inventories is integrated into the current assets of a company. Any company must have a series of products or goods for the provision of its services or to develop its productive activity, among which are the items belonging to technical fixed assets and stocks. While the latter are constantly renewed, since they are consumed and sold regularly, the former participate for a long time in the production process. And all this without affecting the solvency of the business.
It is necessary to differentiate several classes of stocks:
- Raw materials: these are unprocessed merchandise, the materials that will be used in the process of production.
- Finished products: are the products created by the company and that are oriented to the end customer or to the use thereof by other companies.
- Semi-finished products: these are products manufactured by the And that to reach the market they require another elaboration step.
- Commercial stocks: materials acquired by the company and oriented to subsequent sale, without any type of manipulation.
- Different supplies: makes references to different elements that are being incorporated such as office supplies, fuel, packaging, spare parts, etc.
The storage period of the stocks may vary depending on the sector, but the estimated time is between one and five months. A longer period could generate an obsolete merchandise, with the subsequent loss of its value. Companies are dedicated to the manufacture and purchase of products to market them, not to accumulate them in the warehouse, since this also causes an expense, especially if there is no space for storage.
In some cases, holding stocks for a long time can be a strategy in the face of a possible rise in the value of stocks in the market. In this way, they wait for the price to rise to sell it. It is advisable to know all the information inventories to control the company's stocks.
Control of expenses