Methods to Take When Company's Product Goes Bad (Business Info)(02/2018)

(CREDITS):

--written by thewriter197
--employed by Ashford University


When a company's product starts doing bad in terms of sales or profit, this is defined as a imperative lost. In other words, an imperative lost is when company's product is no longer doing good or is doing really bad. Now, some companies can use the "Cash-Flow Method" to determine how a bad a product is really doing. The purpose of the cash flow is to determine the payment amount for a product and to determine the profit made for a product. This process can be difficult if the company does not keep track of the transaction process going on in their company. It can also be difficult if someone in the company is lying about the transaction and profits of a product. The company could use a "Discounted Cash Flow" method to figure out how bad a product is doing. However, this will only give them a judge mental and statistical guess. They can use this method but it is based on what seems to be popular "out int he open." The problem with this method is that what's popular is not always what is working. What works just works. It does not need to be popular. Doing something popular does have its advantages but the disadvantage is a large amount of competition. I company should use the "Cash Flow" method instead of the "Discounted Cash Flow" method. This way they have a pretty good idea on rather a product is working or not working. A good company should trust results and not "what is popular." Results last forever. Popularity changes every 5 years. The fair market value should depend on results not statistics and popularity. A good business will trust what is working and not get caught up into what "looks good."


Reference:

https://www.investopedia.com/ask/answers/101314/how-impairment-loss-calculated.asp
https://www.accountingtools.com/articles/2017/5/17/cash-flow-statement-direct-method
https://www.investopedia.com/terms/d/dcf.asp