What is the Difference Between Stock and Inventory??????
Dharam Jilka
(Finalist )
(96 Points)
Replied 22 September 2011
Inventory represents one of the most important assets that
most businesses possess, because the turnover of inventory
represents one of the primary sources of revenue generation
and subsequent earnings for the company's
shareholders/owners.
Possessing a high amount of inventory for long periods of
time is not usually good for a business because of
inventory storage, obsolescence and spoilage costs.
However, possessing too little inventory isn't good either,
because the business runs the risk of losing out on
potential sales and potential market share as well.
Inventory management forecasts and strategies, such as a
just-in-time inventory system, can help minimize inventory
costs because goods are created or received as inventory
only when needed.
Stock: type of security that signifies ownership in a
corporation and represents a claim on part of the
corporation's assets and earnings.
There are two main types of stock: common and preferred.
Common stock usually entitles the owner to vote at
shareholders' meetings and to receive dividends. Preferred
stock generally does not have voting rights, but has a
higher claim on assets and earnings than the common shares.
For example, owners of preferred stock receive dividends
before common shareholders and have priority in the event
that a company goes bankrupt and is liquidated.
Also known as "shares" or "equity".
Stocks are the foundation of nearly every portfolio.
Historically, they have outperformed most other investments
over the long run.
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