| Squilliam said: I think you're forgetting that come April 1 2009 that TV sitting in the inventory must be depreciated at a rate of ~40%. The TV which was once worth $700 is now worth $420 or a loss of $280. So either they move the stock now by cutting the price or they are forced to take a larger hit later in the form of depreciation. Also they cannot begin to produce new TVs until the old stock is cleared and they've recieved the cash back for them. So whether they take the loss now or depreciate it later the loss is still going on their books. And the production costs do effect things, for example next year a TV produced in February will cost less than a TV produced at the same time the previous year and will be better suited to the current market conditions.
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In none of those examples does the January production cost affect future earnings. The fact their stock is full may affect them, but that happens no matter what the production cost was.
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