Inventory can be described as the stock a business keeps to generate revenue.

Inventory is the collection of goods and materials that a business holds for the purpose of resale, production, or day-to-day operations. It represents one of the most important current assets on a company’s balance sheet because it directly ties to sales and cash flow.

In accounting and business, inventory can include:
Raw materials – items purchased to be used in production (e.g., wood for furniture making).
Work-in-progress (WIP) – goods that are in the process of being manufactured but are not yet finished.
Finished goods – completed products ready for sale to customers.
Merchandise inventory – for retailers, this is simply the products bought for resale.

Why inventory matters:
It ensures businesses can meet customer demand.
It helps manage cash flow (too much inventory ties up money, too little causes stockouts).
It is used to calculate the cost of goods sold (COGS) and profit.