Inventory valuation refers to how you value your stock. It’s a very important aspect
of a business as inventory can be the biggest asset of a company. An inventory valuation
of a company helps to know the monetary value for items in their inventory. To ensure
reliable financial records on inventory reports, careful calculation of them is
important. The main aim of inventory valuation is to find the revenue. After deducting
the expense of product sold from sales, gross profit is determined. Purchases plus
opening stock minus closing stock are the cost of products delivered. The accurate
value of the inventory measures the current assets, cash flow, shareholders' or
owners' equity reported on the balance sheet.