AccuVal's inventory valuations contrast clients' internal performance with the competitive marketplace and advise businesses on how to improve inventory management to increase return on investment. Inventory is a valuable resource that companies often use to fund a portion of their working capital requirements. An in-depth understanding of manufacturing processes and diverse industry experience enables AccuVal appraisers to fully recognize the value associated with attributes of raw materials, work-in-process and finished goods inventories sold through wholesale and retail distribution.
Frequent, accurate and timely inventory valuations help to facilitate revolving credit facilities between companies and lenders. By knowing how much cash would likely be recovered from a sale of the inventory, financial institutions can make better informed decisions about how much to lend to a company while appropriately managing risk. Inventory valuations also help companies improve the accuracy of their financial reporting and often the bottom line through tax appeals or inventory management consulting.
Inventory appraisals principally involve a multi-step data analysis of a company's inventory reports to arrive at a valuation conclusion. To conduct a valuation of inventory, AccuVal's team first seeks to define the framework of the engagement by determining the purpose and use of the appraisal, the effective date of the report and the list of inventory to be evaluated. Next, appraisers determine how the inventory will be appraised and if/how it will be classified and categorized in the inventory appraisal. It is crucial that, when conducting inventory valuations, appraisers clearly understand the nature of the company's business; competitive factors influencing the success of the company; the industry(ies) in which the company competes; the condition of the customer base and/or alternative purchasers of the inventory; and many other business factors that influence value.
Inventory appraisals generally begin with the request of a variety of inventory reports and information pertaining to the company's historical sales. AccuVal appraisers meet with management to inspect the inventory, discuss the inventory reports and better understand the company's procedures with respect to producing and/or sourcing the inventory and distributing it to intermediate and/or end customers. We carefully review inventory tracking methodologies, customer sales history, accounting methods, storage disciplines and all other factors that can affect the value and marketability of the inventory.
Appraisers conduct a detailed analysis of all of the information obtained during the inspection of the inventory, including gross margins, over and inventory mix, and balance. Sales of comparable inventory are always analyzed, when available, as is any other market evidence that assists in the accurate valuation of inventory. Our findings are discussed in detail in a narrative inventory appraisal report which frequently includes suggestions as to how to best monitory the composition of the inventory on a go-forward basis.
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An appraisal can be leveraged to address many business challenges: