How do I check a farm supply store’s slow-moving seasonal inventory?

Seasonal goods such as fencing supplies, sprays, seed and heating items can sit unsold for a full cycle. Take the inventory list and walk the store and any outside or back storage. Look for packaging that is faded, dented or past a date, products that have been discontinued and dusty items in the back. Ask which lines have not sold since the last season.

Compare the list with sales by product. A shelf full of something that has barely sold is a cost, not an asset. Ask how the seller marks down slow stock, whether returns to suppliers are possible and how the store handles products that expire or are no longer permitted for sale. Chemicals and treated goods may have storage and disposal needs that your advisers can explain.

Next, look at how the inventory is valued and financed. Ask your accountant how it appears in the books and whether the stated figure could be overstated. If suppliers have extended credit or the stock secures a loan, the arrangement may not transfer cleanly, so ask your lawyer. Agree with the seller before closing on how stock will be counted and which items you will not accept at full value.

Key takeaways

• Mark every old or out-of-season item during a shelf walk.
• Compare stock on hand with what actually sold last season.
• Agree on how stock is counted and which items are excluded.