Are trade debtors added in inventory or not?

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1167784

2026-08-27 11:00

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Trade Debtors form part of working capital - they are an asset on the balance sheet, but are NOT part of inventory.

Trade debtors represent the amount owed by customers to a business for goods/services sold on credit (i.e.not sold for cash).

Inventory usually represents a business's stock (also part of working capital) - there are normally 3 sub-categories of inventory, being Raw Materials, Work-in-Progress (or part-finished goods) and Finished Goods (i.e. goods ready to sell / deliver to customers).

The other element of Working capital is Payables (or Creditors), which are amounts owed by the company to others, typically suppliers.

Working Capital = Debtors + Inventory - Payables

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