common sense: Don't launch until you have big stockpile

Started Apr 9, 2012 | Discussions thread
James Van Artsdalen
Regular MemberPosts: 319
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stockpiling doesn't pay bills; selling does
In reply to PatFahey, Apr 10, 2012

PatFahey wrote:

So you're making the leap from:

Nikon is selling every camera they can make, as fast as they can make them
to
"It could be fatal for the company"

This is the key to the issue: you have to actually sell the cameras to make money. Stockpiling doesn't make a penny (yen); instead stockpiling costs a lot.

Companies can and sometimes do go bankrupt when they get too many orders, try to fill them all too quickly, and run out of money before they get paid for the ones they did build. It's rare for a surge of orders to cause a bankruptcy since it's a business school 101 situation to manage, but it does happen. When a bankrupt company lists far greater assets than debt it means those assets weren't convertible to cash fast enough to meet even the minor debts.

Nikon probably built the biggest stockpile they could in the time they had and with the money they had, but there are limits to how long they could go without being paid.

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