One of the most costly aspects of supply chains is the management of inventory. The importance of inventory management and the need for the coordination of inventory decisions has been evident for a long time.
In order to address client demands, every organization has to maintain a sufficient inventory level for uninterrupted supply to its customers. Inventory audits help identify gaps/improvement opportunities related to inventory process such as availability of sufficient stocks, re-ordering levels and requisition to replenish the wiped stock, inventory receipt/ issuance process etc. During the inventory audits, auditors also evaluate the physical stock found at Warehouse v/s stocks maintained at companies book stock (ERP).
Liquidity is an important measure of your company's financial health. This calculation determines how well you can pay off your short-term debts. There are a few different ways to measure liquidity. Your company's inventory impacts its liquidity differently depending on which calculation you use. The correct measure of inventory's impact on liquidity depends on the type of inventory your company sells.- DAVID RODECK.
Source- https://smallbusiness.chron.com/inventory-impact-liquidity-business-42746.html