Inventory is a company's goods that are ready for sale. Inventory is also considered a current asset on a company's balance sheet.

Why is it important?

Companies that sell goods need to have inventory available to supply the demand for said goods.  

In order to minimize costs, companies should optimize their inventory to supply customers for a set period of time. On the flip side company's that have large inventories or inventories sitting in storage adds incremental expenses that increase the cost of goods sold, thus potentially impact profits for a company.