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Hooker Furniture Corp. Message Board

  • faqasoll faqasoll Jul 5, 2005 1:03 PM Flag

    Inventories

    High inventory is only bad
    1. If there is no market for the product.
    2. If it is perisable.
    3. If it will become obsolete.

    Inventory is good
    1. If over manufacturing caused by poor projects.The material, labor, most overhead have all been paid for all ready. As the inventory is sold down the margins increase along with profits.

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    • Last time I checked, you couldn't deposit 2,000 end tables into a bank account. High inventory is not always bad (seasonal products, etc), but EXCESS inventory is. You're tying up your capital for a long period of time; if you didn't have all those tables in some warehouse, you could be earning interest on that same amount of money. Not to mention that write-offs on the stated value of that inventory get more and more likely the longer it sits in some warehouse.

      Porch

    • Oh yes and so goes the stock price.

 
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