Financial effects of running down inventories

If your strategies include plans to substantially reduce inventories, you should prepare your investors to expect the following financial effects:

• Your inventory "assets" will be largely converted into cash
• This will cause a paper "profit loss" even while freeing up fantastic quantities of available cash

It is generally a good idea to educate your investors that this is a "good thing" BEFORE surprising them with a financial statement showing a paper loss.

It might also be a good idea to present your investors with your ideas for what to do with all the free time and spare cash generated by continuous improvement efforts.