Inventory and Cost of Goods Sold (COGS) are essential business concepts that have a major impact on the financial health of any organization. Inventory is the total stock of goods held by a company, such as raw materials, components, work-in-progress, finished products, and other related items used in production. Cost of Goods Sold (COGS) is the total cost associated with selling those goods: including material costs, labor costs, overhead costs, transportation costs and more. Knowing the inventory balance and its corresponding cost allows businesses to better manage cash flows, make informed decisions around pricing, and maximize their profits.