Asset vs Inventory: when I did MBA in Madras University (Distance mode), through weekend classes in IIMM CHENNAI,in one class ,asset and inventory was explained with a very simple analogy.the analogy used was related to transport/logistics,since we were studying to get MBA in Logistics and Supply chain management. It goes like this,"for a manufacturer of passenger cars, cars ready for dispatch from the manufacturing unit is inventory (Finished goods inventory) conversely for a company that is in the business of giving cars on hire or rental,the same cars are treated as assets in the books of the company,since these cars bring revenue over and above the running and maintenance costs." Like wise in each vertical analogy can be used to explain , inventory vs. asset.the above concept was exploited to the full by uber and ola,since an asset needs to be maintained (maintenance costs)and run(running costs-fuel cost,driver cost) to get utility value, customer can use a car without incurring maintenance and running costs.besides cost of purchasing a car is a big spend on the budget of a family.
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