Obsolete Inventory

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Obsolete Inventory

Inventory that has not been sold to customers at the end of its useful life. A company writes off its obsolete inventory; because the company has not sold this inventory, it does not produce any revenue. Obsolete inventory can result in significant losses. Some investors look out for obsolete inventory because it can indicate either lack of demand for the company's product or poor inventory management.
References in periodicals archive ?
obsolete inventories from distributors, wholesalers and printers or other companies."
Impacts include: customer service-level improvements of 10 percent to 20 percent; a decline in excess and obsolete inventories of 20 percent to 50 percent; improved inventory turns up to 2 times; 30 percent to 60 percent reductions in delivery expedites, and 15 percent to 30 percent throughput improvements.
Is a system in place so that obsolete inventories have a reserve against them and that ALL items are reviewed on a regular basis?
The company may handle very large contracts with companies for the recovery of excess and obsolete inventories and may provide for end-of-lease equipment management and other large-volume equipment acquisitions primarily for reuse recovery.
Its customers are also its suppliers through repurchasing or consignment of excess or obsolete inventories. This two-way partnership adds further verification of product quality from a qualified distribution partner.
The group also hopes to team up with leading suppliers, manufacturers and distributors of aid items, and with transportation companies, to help them manage donations and liquidate excess and obsolete inventories.
According to the company, the results for the year and quarter were also driven by the issuance of warrants in settlement of claims, a write-off of goodwill at First Alert, increases in reserves for excess and obsolete inventories and impaired fixed assets, and by the company's program to reduce retail and company inventories of Sunbeam branded products.
That deficit followed a $66 million after-tax operating loss in fiscal 1990, which included a $100 million charge to cover costs for closing marginal stores and the disposal of obsolete inventories. Before the special charges Thrifty lost $53 million in 1991, in contrast to a $34 million profit a year ago.