Stock and flow

A stock in business and social accounting refers to the value of an asset at a balance date (or point in time), while a flow refers to the total value of transactions (sales or purchases, incomes or expenditures) during an accounting period. If the flow value of an economic activity is divided by the stock value, we obtain the number of turnovers (or rotations) of a stock in an acounting period. Some accounting entries are normally always represented as a flow (e.g. profit), while others may be represented both as a stock or as a flow (e.g. capital).

However, as accounting and economic concepts have been applied outside the field of business, stocks and flows may also take on other meanings. Thus Stocks and flows are the basic building blocks of system dynamics models. Jay Forrester originally coined them as "levels" (for stocks) and "rates" (for flows).

A stock (or "level variable") in this broader sense is some entity that is accumulated over time by inflows and/or depleted by outflows. Stocks can only be changed via flows. Mathematically a stock can be seen as an accumulation or integration of flows over time - with outflows subtracting from the stock. Stocks typically have a certain value at each moment of time - e.g. the number of population at a certain moment.

A flow (or "rate") changes a stock over time. Usually we can clearly distinguish inflows (adding to the stock) and outflows (subtracting from the stock). Flows typically are measured over a certain interval of time - eg. the number of births over a day or month.

Examples

Stock	Inflow(s)	Outflow(s)
inventory	incoming goods	outgoing goods
guests in a hotel	guests arriving	guests leaving
population	births immigration	deaths emigration
water in bathtub	water pouring in	water leaving through sink
waste in disposal site	dumping waste	decay of waste
bank account	paying in	withdrawals
fuel tank	refueling	fuel consumption