Sunday, July 27, 2008

Beginning and ending inventory

Beginning inventory is the book value of goods, inputs, or materials available for use or sale at the beginning of an inventory accounting period.
Beginning inventory is similar to ending inventory except that it is adjusted for any accounting discrepancies. BI is an important figure for companies because they use it to gauge new ordering requirements and to forecast future sales. Company managers can be evaluated based on their levels of beginning inventory and inventory turnover.
Ending inventory is used to gauge whether companies have overestimated their need for inputs and production requirements.

No comments: