The amount of increase or decrease in inventories during a specific period. Inventories are goods or materials that a company holds for sale or use in its production process. An increase in inventories means that purchases have exceeded sales, implying a cash outflow. A decrease in inventories means that sales have exceeded purchases, implying a cash inflow. The increase or decrease in inventories is subtracted from or added to net income to calculate cash flow from operations on the cash flow statementю