Inventory value means the flow of costs does not always match the flow of goods.

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Inventory value is calculated by adding up the cost of all the goods that a company has in its inventory. However, the cost of these goods may not match the order in which they were purchased or produced, leading to a mismatch between the flow of costs and the flow of goods. This is known as the "cost flow assumption" and there are various methods that companies can use to allocate costs to their inventory, including First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average cost methods.

Inventory Value Means the Flow of Costs Does Not Always