If you’re a business owner, understanding the difference between Cost of Goods Sold (COGS) and Inventory can be a valuable asset. COGS is an expense that tracks all costs related to producing the goods or services your company offers, while Inventory reflects the cost of goods and materials that are held on the shelves in anticipation of sale. Knowing the distinction between these two terms helps you accurately track your expenses, plan for upcoming spending, and stay informed about your financial health.