The definition of inventory is the goods and materials that a business holds for the purpose of reselling. It is considered an asset because it can be converted into cash or used to produce goods and services. Inventory is a key component of a business’s balance sheet and is typically the largest current asset. It is important to accurately track and manage inventory levels to ensure that the business has enough goods to meet customer demand, but not too much that it becomes a burden on the business’s cash flow. Proper inventory management also helps businesses to identify slow-moving items and optimize their stock levels to maximize profits.