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Inventory value would be "dead" investment if we are considering Relevant Costing. In Relevant Costing, the inventory on hand is a Sunk Cost, and it is not considered in the cost of a special order for instance.If inventory that is obsolescent, but could be utilized for a "special order" as well as be sold for scrap value of say2 units of currency, then it is not a suck cost any longer, but a "opportunity forfeited" and it would now have a cost in the special order calculation.
Slow moving stock or slow moving final inventory would be "DEAD INVENTORY".
Tracking inventory performance over time is complex and industry specific; may even have seasonal ramifications. High degree of trending or technology would have high incidence of inventory aging in short time.
Statement is not completely true
Reason
Only stagnant inventory is dead investment
But moving inventory "out and came in through the buying and selling" is a successful investment
Whenever turnover increases ,return increases
Well it depend what we buy if we buy the stock which have good sale then it is not
but if we buy a less demand stock or nil demand stock then yes it is wastage of money then it is dead investment.
Not all Inventories are dead investment only Obsolete Inventory is dead investment
Obsolete Inventory refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company.
The amount of your small business's inventory investment directly affects your profit and cash flow. The management of your inventory, for a company that sells products, is crucial to the success of your company. If you hold too much inventory on your shelves or in your warehouse, you run the risk of obsolescence and getting stuck with inventory that you can't sell. If you hold too little inventory, then you are risking stock outs and loss of customer good will.
No It's not a dead,we can sell it out date code basics
I agree with all the experts answers>>>>>>>>>
Inventories without salvage value to be maintained is a dead investment. Else tangible inventories are not a dead investment but needs great focus to optimize it.
..Because once bought if not used they will block the amount that could be invested otherwise. We calculate inventory turns for companies to see how fast they are converting their inventory to goods sold. BTW i see my finance people getting their cotton stocks pledged from bank and thus getting loans. This is one way out from the dead investment.
Again.... I am really not good in Finance ... I am sorry Wasi...I could not provide any answer
I fully agree with the answers been added by EXPERTS..........................Thanks
