Ten hard questions to ask or be asked
| 1 | How price-sensitive is demand for the products? Are pricing policies (still) appropriate? |
| 2 | Are costs of sales properly identified? |
| 3 | Is revenue booked at the appropriate time period? |
| 4 | Do you have at your fingertips product costs at any given level of sales? |
| 5 | Which of your products has the lowest gross profit margin? The highest? Why? |
| 6 | Is inventory well managed and not bloated? |
| 7 | Is inventory valuation realistic? Is its realizable value different from the book value? |
| 8 | Does the inventory include any obsolete or damaged items? |
| 9 | Do you have appropriate controls over receipts from sales, refunds, etc.? |
| 10 | If comparing companies, are inventory valuation methods similar? |
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