The business inventory and stock appraiser faces challenges every day, especially with the light of an approaching recession, that keep his work exciting: in addition to utilizing available data in our database of realized returns, he also puts his predictive and analytical skills to use.
In stable market conditions, our database can be a reference for substantiating the value of machinery and inventory. After all, realized returns are then available from equivalent properties in the past, some more recent than others. But the predictability of present value is there.
Over the past two to three years, we saw a booming economy. But also sharply increasing delivery times for new products, higher manufacturing and transportation costs, and consequently rising revenues for used machinery and complete merchandise inventories. A period when the experienced appraiser knows he had to appraise more progressively to keep up with market trends. And sometimes liquidations even exceeded expected returns.
Past earnings
Clearly, we are at a tipping point in the economy whose predictability is increasingly difficult to assess. The well-known credo “past returns do not guarantee future returns” also applies to our profession if we replace the word returns with yields. We can no longer rely completely on the predictability of realized returns using our database as a reference.
Our appraisers are used to continuous market research on current developments. They put their accumulated knowledge to use and act as market researchers. The available data are interpreted according to the market conditions at the time and are translated to current events.
Continue to monitor market development
As a result of increasing delivery times, and until recently very high container costs, warehouses are completely filled with supplies destined for private individuals. And these will have to start being sold in the coming months, while consumers have significantly less to spend due to inflation and especially gas bills. What effect will this have on the marketability of consumer goods inventories? How big the impact will be is difficult to predict, but an experienced appraiser will appraise more conservatively, paying close attention to market developments.
Yet there is still a shortage of other supplies such as raw materials, think construction materials or grain. For the time being, these prices do not appear to be going down and do not require adjustment in an appraisal. The mechanical engineering industry is still full in production and suffering from high steel prices and shortages of chips and personnel, among other things. As a result, the price level of used inventories still remains relatively high. But does this also apply, for example, to bakery or hospitality inventories? Data from recent months do not yet show price declines, but the market researcher knows the turning point is very near.
Regardless, the profession of movable property appraiser remains fascinating and evolving, in all economic conditions.
Feel free to contact one of our experienced appraisers for an appraisal of your inventory or business inventory or if you are an appraiser to spar about this wonderful profession.
