Finished goods are products that have completed all aspects of the production process, and which are being held for sale. Products still in the production process are classified as work-in-process inventory. Several characteristics of finished goods are as follows:
- A company with a fast delivery strategy may need to keep a large amount of finished goods inventory in stock.
- A company may want to minimize its finished goods inventory if the inventory has a short shelf life, and so is at risk of spoilage or obsolescence.
- Finished goods are considered to have significant value as collateral for a lender, since they can be sold off with no delay for finishing work.