The Full Cost Of Inventory: Exploring Inventory Carrying Costs

For most retailers, wholesalers and distributors, inventory is the largest single asset on your balance sheet. In many ways, your inventory defines who you are, and your strategic position in the marketplace. It defines your customer's needs and their expectations of you. Legions of cost accountants are employed to accurately capture and capitalize all of the direct costs of inventory. The cost of that inventory is the single largest expense item on most every Income Statement. Most companies evaluate the productivity of their inventories through such yardsticks as inventory turn, gross margin return on investment, gross margin return on square foot and the like.