What is meant by 'Stock Obsolescence'?

Stock obsolescence refers to inventory that has become outdated and unable to be sold or effectively utilized. This typically happens when products are superseded by newer versions, trends change, or the items become less relevant due to technological advancements or shifts in consumer preferences. When stock becomes obsolete, it often results in financial loss for businesses as it leads to increased holding costs and a potential write-off of the unsellable inventory.

In contrast, stock that has been sold does not carry the implication of being outdated, while stock that is currently in high demand is desirable, not obsolete. Additionally, stock that is temporarily out of stock implies a temporary shortfall rather than a loss of relevance or usability. Therefore, the definition of stock obsolescence is aptly captured in the identification of items that can no longer serve their intended purpose effectively.