What is Beginning Inventory?

Beginning inventory refers to the value of goods that a company has for its use or sale at the start of an inventory accounting period.

How Does Beginning Inventory Work?

Say Company XYZ produces 5,000 units during the course of a year and sells 2,000 units. The following year, Company XYZ will have a beginning inventory of 3,000 units.

Why Does Beginning Inventory Matter?

Beginning inventory is an important indicator of what a company will be ordering for the upcoming year. It can also be used to project coming costs for a company to ramp up production or coming revenues for its suppliers.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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