Definition
Inventory at cost (stock at cost in the UK) is the value of goods on hand measured at what the business paid to buy or make them, not at their selling price. It can include raw materials, work in progress and finished goods, and sometimes freight and import costs. Accounting rules generally require stock to be written down when it is worth less than it cost, for example because it is damaged, out of date or no longer selling.
Worked example
Marrowbone Outdoor Gear is a fictional UK online retailer. A stock count finds 10,000 items that cost £20 each, so stock at cost is £200,000. At full retail prices the same stock would sell for £500,000.
Of those items, 2,000 are a discontinued jacket that will not sell for more than £10. Writing each one down from £20 to £10 reduces stock at cost by £20,000, to £180,000.
Why buyers care
Listings often say a price is "plus stock at valuation" (often shortened to "plus SAV") or "including stock". Find out which, because the difference can be large.
Agree that stock will be counted and valued close to completion rather than taken from last year's accounts. Agree too how slow-moving, damaged or obsolete items are treated, and who decides. Ask for stock ageing reports so you can see what has not sold.
Loupe's valuation tool offers inventory at cost as an optional field for ecommerce, retail and distribution businesses. It shows the figure as an addition beside the indicative range rather than blending it into the multiple.