As appraisers, we are often asked what a “standard” value is for any given type of inventory. Many of our clients seem confused when we tell them that it is difficult to answer this type of question. We perform appraisals on many companies with similar inventories, however, the orderly liquidation value can vary significantly even on inventory which is almost exactly the same. There are so many factors that go into an appraisal which include, but are not limited to, inventory turns, systems and controls of the company, FIFO rotation, spoilage factor, customer base, purchasing power of the company, etc. Some companies manage their inventory well, while others do not. Although the inventory may be exactly the same, our liquidation values may be very different based on how the company purchases, manages, handles and sells their product.
