Question

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Why does change in the inventory of a firm is treated as investment?​

Answer 1

Answer:

Explanation:

nventory investment is a very small part of total business investment, it is of considerable ... Inventory investment tends to be closely related to changes in production. ... In this sense inventories can be treated as a factor of production.

Answer 2

The change in the inventory of a firm is treated as an investment because that's how they going to regulate future business processing.

EXPLANATION  -

The inventory is the opening collection of the good that business use to starts is processing or channelizing in the market.

The inventory as its own value for the firm and treated as liquid assets that can be changed into cash easily in a short period of time.

The inventory is treated as an investment when a good amount of the money is used to buy the bulk of the inventory for the large scale of the business operations.

The demand for investment in the bulk of inventories can be changed as per the accounting year and the demand and supply for the goods.

Conclusion-

There can be lots of variations that can be done on the part of the investment in the inventory.

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