Impact of Inventory Valuation on Financial Position of the Enterprise

Inventory is an asset of significance for an enterprise. Inventory valuation has an impact on the enterprise asset, current profit, current cash flow, overall financial ratios and tax issues like income tax. It also influences the operating performance among enterprises to a significant level. This paper investigates effectiveness of different inventory valuation methods stipulated in current accounting standards of India. Present research paper also focuses on effect of different inventory valuation methods on company's financial position. The present study is mainly based on secondary data. The study shows that improving accuracy of accounting and profit reporting by using accurate information, usually through an integrated software system leads to efficiency reporting for running an efficient and profitable enterprise.