Inventories refer to finished products or commodities held by an enterprise for sale during the normal production and operation process, or for the purpose of selling products that are still in the production process, or materials and materials consumed in the production process and labor process.

It is a barometer that reflects the operation of corporate liquidity, and often becomes an adjuster used by a few people to adjust profits and evade national tax funds.

Because it not only accounts for a large proportion of the company's working capital, but also is a current asset with poor liquidity.

Inventory management is the management of an enterprise's inventory, which mainly includes inventory information management and decision-making analysis based on this, and finally effective control to achieve the ultimate goal of inventory management and improve economic benefits.

The reason why enterprises retain inventory is on the one hand to ensure the operational needs of production or sales, and on the other hand it is due to price considerations. The price of retail supplies is often higher, while buying in bulk offers discounts on price.

However, too much inventory will take up more funds and increase various expenses including warehousing fees, insurance premiums, maintenance fees, and management personnel salaries. Therefore, the goal of inventory management is to try to achieve the best possible balance between various costs and inventory benefits.

To make a trade-off between them and achieve the best combination of the two, this is the goal of inventory management.

As an important current asset, inventory is bound to occupy a large amount of working capital.

Under normal circumstances, inventory accounts for about 30% of the total assets of industrial enterprises, and the proportion of commercial circulation enterprises is even higher. Its management and utilization is directly related to the enterprise's capital occupation level and asset operation efficiency.

Therefore, if a company wants to maintain high profitability, it should attach great importance to inventory management.

Under different levels of inventory management, the average level of capital occupation of enterprises varies greatly.

By implementing correct inventory management methods, we can reduce the average capital occupation level of the enterprise, increase the circulation speed of inventory and the total asset turnover rate, and ultimately improve the economic benefits of the enterprise.