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What you describe only works for cash basis taxpayers. Public companies are all accrual basis taxpayers. Under accrual accounting increasing your inventory affects the financial statements as follows: * Balance sheet: decreases cash/cash equivalents entry and increases the inventory balance sheet entry (in equal amounts), resulting in no change to net assets or equity * Income statement: no effect * Cash flow statement: will show up as a change to inventory, reducing operating cash flow and total cash flow


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