The Australian Financial Review has reported that Dick Smith, the consumer electronics chain will be listed on the stockmarket at a value of between $550 and $620 million before the end of the year. Eyebrows are being raised after the chain was sold by Woolworths for a mere $20 million less than a year ago. Two likely scenarios arise from this, with the difference in value explained either by Woolworths selling the chain for an absolute pittance, or there may be a write-off of inventory during the last sale of the company. With the inventory having little or no value, the sale of the goods would have produced a handsome profit to report for this year. However, such an accounting change does not answer the key question of whether the chain can buy inventory at cost and sell it for a profit. (VIEW LINK)
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