Inventory Schedule
Does the inventory schedule also utilize outputs from the sell-through schedule and does it reflect the direct cost of purchases as a function of forecast demand? Does the Cost of Goods Sold (COGS) schedule reference the inventory schedule to capture working capital builds?
Receivables/Payables
The relationship between Accounts Receivables and Accounts Payables (AR/AP) is critical to understanding actual cash needs. Often, estimates for days receivables and days payables are used with little empirical support. Companies with an operating history can extrapolate both accounts using historical precedent. Companies without operating history are well served to eliminate reliance on trade credit in the cannabis industry.
Returns
Are there reserves for returns and are there assumptions surrounding the realized costs of both facilitating those returns as well as restocking returned items that can be resold compliantly?
Expense Accounts
How are expense accounts separated on the Income Statement? Suggested categories include rent, personnel, general and administrative, marketing and public relations, and income tax. Are variable expenses not included in COGS captured and tied to the appropriate underlying assumptions? Are income taxes assessed in accordance with section 280E of the Internal Revenue Code?
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