Inventories held by firms are the goods and materials that a business has in its possession for sale, resale, or to be used as a component of a final product. This includes raw materials, products in production, finished products, and any other goods deemed necessary for the company’s operations. A firm’s inventory can provide insight into their performance: high levels of inventory can indicate greater production demands, while lower inventory suggests limited demand. It is important for companies to maintain accurate records of their inventories in order to efficiently manage their resources and ensure customer satisfaction.