This paper investigates the impact of internal and external environmental factors as determinants of abnormal inventory. The internal environmental factors include financial conditions, capital intensity, cash flow, sales growth and volatility, gross margin, trade credit, lead time, and firm size. Market power, price volatility, economic policy uncertainty, and inflation rate are considered external environmental factors that influence abnormal inventory. Secondary data were collected for a sample of fifty-two Egyptian firms listed in the EGX 100 index over the period from 2016-2023. Data collected is analyzed using Ordinary Least Squares (OLS) regression with robust command and Panel Corrected Standard Error (PCSE) which is employed only with panel data. Statistical results revealed that internal and external environmental factors have a significant impact on abnormal inventory. Specially, firm's size has a significant positive impact on abnormal inventory. In contrast, sales growth, sales volatility, financial conditions, gross margin capital intensity, and economic policy uncertainty have a significant negative impact on abnormal inventory. In addition to that cash flow, lead time, trade credit market power, and price volatility are not significantly related to abnormal inventory. Inflation is excluded due to multicollinearity with price volatility which implies higher R-squared. The research is limited by the sample size as it is applied on Egyptian firms only. Additionally, the sample was selected from EGX 100 index excluding other listed firms. This research might provide some explanation for managerial decisions regarding abnormal inventory and the appropriate inventory strategy.