Question
Why is obsolete inventory a financial liability for a new owner?
It usually attracts customers looking for vintage items
It ties up capital and has no resale value
It can be quickly sold at premium prices
It requires more storage space
It usually attracts customers looking for vintage items
It ties up capital and has no resale value
It can be quickly sold at premium prices
It requires more storage space
Answers
GPT-4o mini
Obsolete inventory is a financial liability for a new owner primarily because **it ties up capital and has no resale value**. When inventory becomes obsolete, it no longer meets customer needs or market demands, which means it cannot be sold easily or at a viable price. This situation results in funds being tied up in stock that cannot generate revenue, affecting cash flow and overall financial health. In addition, the costs associated with storing this inventory further compound the financial burden on the business.