MANAGEMENT

Detailed explanation-1: -Another method companies use to determine slow moving inventory is by ranking items based on months-on-hand. Months on hand is usually calculated by looking at current inventory quantity and dividing it by monthly average usage. Higher months on hand means the item is slow-moving.

Detailed explanation-2: -This inventory has not been sold or used in a long time and is not likely to be used in the near future. Such inventories must be recorded and may cause a business to suffer significant losses. Obsolete inventory is also known as excess inventory or dead inventory.

Detailed explanation-3: -Slow-moving inventory can also be called Excess Inventory, Aged Inventory, or Leftover Inventory. It refers to products that are needed (they are NOT old stock or previous collections) but are in excess.

Detailed explanation-4: -Once inventory becomes obsolete, it is no longer considered an asset. At the end of an accounting period or fiscal year, the unsellable inventory must be reported on as an inventory write-off in accordance with the Generally Accepted Accounting Principles (GAAP).