What does a "security interest in inventory" secure?

A "security interest in inventory" specifically secures goods that a business holds for sale or lease in the ordinary course of its operations. This definition encompasses items that are currently on the shelf ready to be sold, as well as goods that are being processed or produced for future sale.

Inventory represents a significant component of a company’s current assets and is often critical for maintaining cash flow and supporting business operations. When a lender takes a security interest in a borrower’s inventory, they can stand to gain if the borrower defaults, as the lender can assert rights over these tangible assets.

The other options, although relevant in different contexts, do not accurately reflect what is meant by inventory. For instance, completed work or services point towards finished goods but do not highlight those actively held for sale or lease. Personal assets owned by the business may include inventory but also comprise other types of assets that are not solely categorized as inventory. Cash flow, while essential in business operations, does not directly relate to the specific tangible goods defined under the term inventory. Thus, it is clear that option A correctly captures the essence of a "security interest in inventory."