If you’re in the inventory business, you'd better be flipping that inventory like hotcakes.
Inventory flipping is buying-then-selling inventory, and fast—before it depreciates and loses value. Whether it’s your grocery stores selling produce or your neighborhood real estate agent flipping houses, inventory flipping is everywhere you look.
Well, everywhere there’s a middleman making a buck, anyway.
Different types of inventory age and depreciate in value at different rates. For instance, most cars depreciate a lot—like a steep cliff on the graph—once they’re driven off the lot as "new." From there, the value of the car declines more slowly. If you’re in college...where they’re always coming out with a new version of a textbook—you’ll only want to buy and sell your book if there isn’t a new version that will make your soon-to-be-outdated version virtually worthless.
Flip it—and fast.
Related or Semi-related Video
![Finance: What is inventory?](https://media1.shmoop.com/video/thumbnails/COURSE.FINANCE.420_770x433.jpg)
Finance: What is inventory?2 Views
Finance allah shmoop What is inventory Well it's Just stuff
you have for sale in one form or another An
auto dealer Well all those cars she has sitting out
there in the sun is a dive bombing targets for
the birds Yeah while their inventory to the car dealership
the cars are inventory the loads of nose hair trimmers
sitting on the shelves at the well appointed nostril fine
store best nostril trimming store in the world Yet their
inventory albeit kind of gross ish inventory especially after use
the four thousand yards of denim cloth sitting in the
weaving factory waiting for thirteen year old girls in thailand
toe weave it all together to make levi's for the
gap Yep that cloth is inventory It isn't finished inventory
It's just a work in process not yet ready for
prime time or a prime thigh or whatever But it's
an asset for the company who owns it and it
is held as inventory on the balance sheet Work in
process right there at the balance sheet right there Okay
And when that inventory is sold and turned into revenues
it'll just become part of the expenses line on the
income statement usually has cost of goods sold or caw
Gse that's What people in the accounting bids say Cocks
thie Inventory is a good but inventory is always good
Of course as many a customer has learned after taking
a hefty shock straight to the hunger And that hurts
Up Next
How is inventory managed for cash flow purposes? In order to avoid the cost of carrying slow moving or out of favor inventory that would take space...
What are Return on Equity and Return on Assets? Return on equity is a percentage that is found by dividing net income by shareholder’s equity. It...
Work-in-process inventory is just inventory... that is in the process of being built. In other words, it accounts for the inventory's asset value.