Inventory Appraisals

 

The Inventory Appraisal Team of Value Resource Group, Inc. has conducted more than 1,800 Inventory Appraisals since 1986 for Financial Considerations, Ad Valorem Taxation, Purchase Price Allocation, and Litigation Support.  Our principals are considered among the country's foremost experts in Inventory Valuation Theories, Techniques, Aviation Parts and Aircraft, and Liquidation Exit Strategies for:

 

Retail:

 

Retail Inventory includes any product held for resale.  Such inventories can range from a small, single location store to a national chain of retail stores.

 

 

Wholesale Distribution:

 

Wholesale Inventories are maintained at the next level of trade just below retail inventory.  Generally, these inventories include the same items as a retail inventory though usually in much larger quantities, and at wholesale prices.

 

 

Manufacturing:

 

Manufacturing Inventories are those with the largest quantities, and at the lowest cost.  Such inventories include the following classifications:

 

 

·                     Raw Material:

 

Raw Material is typically the term used in a manufacturing operation to designate those commodity materials from which a final product is constructed.  This can range from raw lumber in a furniture operation to magnesium used in the manufacture of fan blades; the final product of which is also a raw material to another company.

 

 

             

·                     Work-In-Process:

 

Work-In-Process is product in an unfinished stage of completion within the manufacturing process.  This, by definition, would exempt classification of these products as finished goods.  However, it is likely there will be items within this classification that are saleable.

 

There are instances where, during an assignment, the appraiser must analyze the cost of completing the manufacturing process to determine if finishing-out the work-in-process justifies the economic benefit.

 

 

·                     Finished Goods:

Finished Goods are goods in which the manufacturing process has been completed.  Semi-finished goods are those items considered finished goods to another manufacturer or processor, but are still considered work-in-process to the subject company.

 

Manufacturers classify inventory in many different ways and, therefore, the appraiser must have the knowledge and experience to interpret the mix of inventory within each classification in order to measure value.

 

·                     Packaging Material:

 

Packaging Material is an aspect of inventory that tends to be proprietary in nature concerning name identification and designs that are specific to a product or company.  Therefore, an appraisal performed under a “piecemeal” concept would exclude such inventory, whereas it would be given value under an “in-use” concept.  There are typically also items within this class of most inventories that are not proprietary in nature or subject to factors of depreciation or obsolescence; in which case, these items would be given consideration under any value concept.

 

·                     Slow-Moving and/or Obsolete:

 

Slow-Moving and/or Obsolete inventory is primarily identified as such due to some form of depreciation.  Therefore, slow-moving inventory is, in effect, obsolete due to physical restrictions and/or characteristics inherent in or external to the item.

 

Recovery of items within this classification is extremely volatile and nominal when compared to the whole.  For these items, the recoverable value is affected to such an extent that, though addressed in the appraisal, they could be excluded from the value depending on the purpose and function of the report.

  

·                     Scrap:

 

Scrap can include unusable materials that have some resale value in the scrap market and are thus maintained on the books as such.  However, some operations produce residual materials that are recognized as a commodity and routinely traded in the open market.  Such scrap can have a high recovery when expressed as a percentage of book value.

  

Inventory Appraisals can be conducted for any type of inventory, at any level of trade, some examples of which are:

·                     Agricultural Products

·                     Aircraft Spares (Rotables &

Expendables)

·                     Automotive Parts & Supplies

·                     Chemical & Petrochemical

·                     Computer Components

·                     Commodity Inventories:

 

o                     Chemicals

o                     Ores

o                     Metals

o                     Paper Products

o                     Plastic & Resins

o                     Wire

o                     Textiles

 

·                     Construction Equipment

 


·                     Construction Equipment

·                     Consumer Products

·                     Forging & Casting

·                     HVAC Distributors

·                     Integrated Steel Mills

·                     Medical Equipment & Accessories

·                     Mini Mills

·                     Musical Instruments

·                     Office Equipment & Supplies

·                     Packaging

·                     Printing / Graphic Arts

·                     Repair Parts

·                     Scrap Metal

·                     Steel Service Centers

·                     Telecommunications Equipment &

Components

·                     Wood & Lumber Products