The Importance Of Inventory Appraisals
Having your inventory appraised is particularly important if your company is being sold or you are getting rid of your stock. Homeowners should also think about having their home inventory appraised, particularly if they collect antiques and other items that increase in price over time. The inventory appraisal is used to determine the risk associated with lending inventory or in otherwise if the inventory had to be liquidated, then how much cash would that bring in?
There are a few different types of inventory appraisal, orderly liquidation value, auction value and distressed value. The orderly liquidation value assume that there is a reasonable amount of time to liquidate the inventory so each item will be sold at a usual, non-discounted price. It takes into account the fact that as the inventory is sold and depleted, less inventory will be sold at its full price as regular orders may not be able to be completely filled.
Orderly liquidation value appraisal takes into account the fact that the company's infrastructure will stay the same and the appraiser will be helped by the company's management and sales associates on all aspects referring and relating to the inventory.
Distressed liquidation value is similar to orderly liquidation but for distressed liquidation the infrastructure of the company will not remain intact but will eventually break down. There may be significant interruptions in the process, problems between owners, lenders, and management, potential inventory problems, no inventory list. This type of liquidation will have a higher liquidation cost ad the return amounts decrease.
The auction value is the least common as an auction is the least productive method to liquidate inventory. Sometimes auctions are used in conjunction with orderly liquidations if the inventory is popular to the general public. This is particularly effective for container plants, light fixtures, small electric appliances, furniture and other consumer oriented products.
The Inventory appraisal will change over time as it is tied to the current markets and currency strength. As the company has more funding and better working capital then the inventory appraisal will increase. Inventory appraisal will display both the positive and negative aspects associated with your inventory, as well as validating the company's profit and loss statement. Inventory appraisals are good for displaying cash flow.
Many times different individuals such as the company and the buyer may disagree about the inventory appraisal. Each inventory appraisal company will provide and opinion of value that states that the appraisal was based upon experience, practices and the input provided by management. This may change if new information is presented about the inventory but all qualified appraisers do stand behind their appraisals.
Inventory appraisals are used for many different reasons. Besides companies taking a basic home inventory can be quite useful, particularly if you are moving overseas or taking out home insurance and content insurance. You don't need an appraisal by a company but you can take your own appraisal just to determine the contents of your home and if something should occur.
There are a few different types of inventory appraisal, orderly liquidation value, auction value and distressed value. The orderly liquidation value assume that there is a reasonable amount of time to liquidate the inventory so each item will be sold at a usual, non-discounted price. It takes into account the fact that as the inventory is sold and depleted, less inventory will be sold at its full price as regular orders may not be able to be completely filled.
Orderly liquidation value appraisal takes into account the fact that the company's infrastructure will stay the same and the appraiser will be helped by the company's management and sales associates on all aspects referring and relating to the inventory.
Distressed liquidation value is similar to orderly liquidation but for distressed liquidation the infrastructure of the company will not remain intact but will eventually break down. There may be significant interruptions in the process, problems between owners, lenders, and management, potential inventory problems, no inventory list. This type of liquidation will have a higher liquidation cost ad the return amounts decrease.
The auction value is the least common as an auction is the least productive method to liquidate inventory. Sometimes auctions are used in conjunction with orderly liquidations if the inventory is popular to the general public. This is particularly effective for container plants, light fixtures, small electric appliances, furniture and other consumer oriented products.
The Inventory appraisal will change over time as it is tied to the current markets and currency strength. As the company has more funding and better working capital then the inventory appraisal will increase. Inventory appraisal will display both the positive and negative aspects associated with your inventory, as well as validating the company's profit and loss statement. Inventory appraisals are good for displaying cash flow.
Many times different individuals such as the company and the buyer may disagree about the inventory appraisal. Each inventory appraisal company will provide and opinion of value that states that the appraisal was based upon experience, practices and the input provided by management. This may change if new information is presented about the inventory but all qualified appraisers do stand behind their appraisals.
Inventory appraisals are used for many different reasons. Besides companies taking a basic home inventory can be quite useful, particularly if you are moving overseas or taking out home insurance and content insurance. You don't need an appraisal by a company but you can take your own appraisal just to determine the contents of your home and if something should occur.
