What is an Inventory Change?

The aggregate difference between the all types of inventory of the last reporting period and the current reporting period is called inventory change. In most of the companies where the financial statements are issued on yearly biases the inventory change span also spreads over a year time period. However in most of the cases the businesses calculate the change in inThe aggregate difference between the all types of inventory of the last reporting period and the current reporting period is called inventory change. In most of the companies where the financial statements are issued on yearly biases the inventory change span also spreads over a year time period. However in most of the cases the businesses calculate the change in inventory on monthly or quarterly biases. The example of an inventory change can be shown as if the ending inventory at the end of the March is worth $400,000 and the ending inventory of April is $500,000 then inventory change for that month can be calculated as $100,000. The concept of the change in inventory is used in accounting in order to calculate the cost of goods sold and it is also used in material department to find out the efficiency of the management of the inventory. Sometimes the inventory change is also used in the budgeting process to find out what are going to be the future cash flows required by the company. Inventory change is used in the formula that is used to determine the cost of goods sold. This can be shown as under:- Beginning Inventory +Purchases + Ending Inventory = Cost of goods Sold Moreover the change in inventory is used in material management department in such a way to find out the degree of efficiency of management in purchasing materials and the usage of these purchased materials. In budgeting the staff uses inventory change to find out the difference of inventory for the future and the cash required by the firm during the coming period.   ventory on monthly or quarterly biases. The example of an inventory change can be shown as if the ending inventory at the end of the March is worth $400,000 and the ending inventory of April is $500,000 then inventory change for that month can be calculated as $100,000. The concept of the change in inventory is used in accounting in order to calculate the cost of goods sold and it is also used in material department to find out the efficiency of the management of the inventory. Sometimes the inventory change is also used in the budgeting process to find out what are going to be the future cash flows required by the company. Inventory change is used in the formula that is used to determine the cost of goods sold. This can be shown as under:- Beginning Inventory +Purchases + Ending Inventory = Cost of goods Sold Moreover the change in inventory is used in material management department in such a way to find out the degree of efficiency of management in purchasing materials and the usage of these purchased materials. In budgeting the staff uses inventory change to find out the difference of inventory for the future and the cash required by the firm during the coming period.

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