This software assumes the analyst has developed retail values for the inventory;there are categories for 12 different types of inventory. Label each type and enter the current unit values for the first period. In the columns to the right, next to each retail value category, enter the number of sales for that category. Unit values will carry forward to each period, adjusted for appreciation if applicable, but the number of sales must be entered for each period of the analysis. Note: Cells with formulas are locked and connect be selected. Adjusting Retail Values for Appreciation Where warranted, adjust future values by adding appreciation. Appreciation must be entered for each period of the analysis - entering a rate in the first period will not carry forward to future periods. Important: Use care to match the appreciation rate with the frequency of cash flows. Annual cash flows are straight-forward. Appreciation for semi-annual cash flows should be half the annual amount and quarterly rates should be one-quarter the annual amount. We note these are approximations - as the rate is divided and intervals increase, a degree of accuracy is lost. For example, an annual appreciation rate of 10% will increase $10,000 to $11,000 using annual accounting. However, using a 2.5% rate and quarterly cash flows, $10,000 will increase to $11,038 over a years time. Thus care should be taken when applying appreciation to monthly, quarterly or semi-annual appreciation, particularly when large amounts of inventory are involved. |