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Q: I am trying to use this tool for a retail business that has inventory. My questions concern accounting for inventory value as an asset (not to be depreciated) and 'cost of goods' an an adjustment to sales.
A: For non-depreciating items you can handle them as a component of the Other Investment (operating capital). This value is actually adjusted by the Valuation (depending on the return you set). Considering the Inventory when you generate a valuation the Other Investment value should cover the the cost of inventory (stock on hand). If there was no other investment component to consider then the Other Investment would consist of Inventory plus Goodwill. If the Other Investment is less than the inventory then the required return is not achieved.
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