What consequence might arise from inaccurate inventory valuation methods in the Material Master?

Inaccurate inventory valuation methods in the Material Master can lead to unreliable financial reporting and valuation of assets. Proper inventory valuation is critical as it directly affects a company's balance sheet and income statement. When inventory is undervalued or overvalued, it distorts the financial health of a company, affecting profitability, tax liabilities, and investment decisions.

For example, if inventory is overvalued, it may give the impression that a company is performing better than it actually is, resulting in potential issues with stakeholders and regulators. Conversely, undervaluation could lead to reduced profits being reported, impacting management decisions and market perception. Hence, consistent and accurate inventory valuation is vital for maintaining the integrity of financial statements and ensuring stakeholders have a true picture of the company's assets and performance.