The report also alleged that new product lines had been pushed onto customers, who were hesitant to purchase more inventory because of implementation issues, and that the Company will need to write off $23 million in
obsolete inventory.
The company said in a statement that its reported results for the quarter and year to date ended June 30 are preliminary due to the company's ongoing assessment of the reasonableness of its current and previously reported excess and
obsolete inventory reserves.
It also identifies items that have an
obsolete inventory count, which could result in outof-stock or overstock situations.
If the industry standard is lower (e.g., 1.25:1 working capital productivity), then the company may have an inventory and/or accounts receivable issue that needs to be addressed, such as
obsolete inventory or a large amount of overdue receivables.
Prior to having your CPA develop the financials you should sell off any old
obsolete inventory, equipment that is not in use, and write off any receivables that are not collectable.
High inventory costs, constant stock-outs, low SKU turnover rates and getting stuck with too much
obsolete inventory are just a handful of the challenges that companies run into when they don't use good inventory management practices.
CTC continues to provide solutions for handset homologation, software, resale channels of EOL and
obsolete inventory, OEM sales and responsible recycling.
It is also noted that the department needs to improve the way it counts inventory in locations other than at major depots, pricing, recognition of
obsolete inventory, and classification of items as an inventory of asset-pooled items (API).
More specifically, large amounts of slow- selling or
obsolete inventory can be detrimental to working capital performance--and it is precisely this issue that is causing trouble for corporates in the Middle East.
* Address obsolete and slow-moving inventory: Regularly dispose of aging or
obsolete inventory, which never gets more valuable.
Obsolete inventory won't shrink if you wait another quarter to mention it.