Asset Valuation Source - Introduction

Inventories

There are three categories of inventory which we provide valuations on: retail, wholesale, and manufacturing.

Retail inventory are those that are at a level of trade that requires the cost to be associated with the same level buying structure. In addition, it may have the smallest quantity on hand for the number of SKU’s (Standard Keeping Units). The consideration is that the value reflects what would occur for a buyer at the same level of trade.

Wholesale is a level of trade that usually is between the manufacturer and the retailer/dealer. Although this inventory may carry the same type of assets as the retailer, the level of trade may mean a different pricing structure and possibly a much larger quantity of inventory to be considered if disposed of. There must always be the consideration of absorption if making the relationship to the amount of items of one SKU that must be valued.

Manufacturing inventories are possibly not as diversified as the wholesaler or retailers and may represent many manufacturers. Besides the finished inventories there are other separations that must be evaluated. Manufacturing inventories include raw material, work in process and the finished goods components. There are other divisions of those classifications. The raw material inventory may have components within the inventory that can be used by other manufacturers. That same inventory may also contain outside purchased parts that are proprietary to the subject only. There are even different classifications in areas that have different recoveries and the appraiser must evaluate this. Work in Process inventories require considerations that include: when the raw inventory is released to work in process and steps involved to transfer into the finished goods category. This is something that the appraiser must determined and adjust for when establishing value.

Qualifications and CV for AVS professionals are available upon request.