oboloo Glossary

Inventory In Cash Flow Statement

oboloo Glossary

Inventory In Cash Flow Statement

Cash flow statements provide a snapshot of how cash is entering and leaving a business. One of the most important aspects of this report is the inventory section, which captures the flow of goods within a company. Inventory can be thought of as the potential for future sales—the more products a company has in stock, the better their chances of making money down the road. This information helps investors understand the potential of a business, and also sheds light on whether it’s sitting on too much stock or not enough. For example, if inventory levels are low relative to sales figures, that could indicate an issue with suppliers or cash flow. Carefully assessing inventory trends is key to getting a full understanding of a business’s financial health.