why do stores have end of financial year sales?

[Pierced Soul]

Is there any main benefit other than clearing out the storeroom? some people have told me it's so they dont have to count all the leftover stuff. Why do they need to count it annually? is there any financial benefit in doing it?

 

[B-dos]

traditionally stores needed to manually count their stock so having a sale to get rid of as much as possible was a great help in reducing this task. These days it would be almost always automated so this is not so much the reason for it.

besides the obvious point of attracting more consumers to buy (irrespective of what time of year it is), businesses need to know what stock they have on the floor as at 30 June each year, as it is all taken into account when working out the profit for the year (which is then used to calculate tax liability).

 

[murraymob]

they over prised there stock in first place. Then sell at so called sale

 

[Pierced Soul]

besides the obvious point of attracting more consumers to buy (irrespective of what time of year it is), businesses need to know what stock they have on the floor as at 30 June each year, as it is all taken into account when working out the profit for the year (which is then used to calculate tax liability).

how does this bit work? i.e. the tax liability. if they sold mroe stuff wouldnt they pay more tax? wouldnt it be better (well not necesaarily from a profit point of view) to pay less tax?

 

[B-dos]

how does this bit work? i.e. the tax liability. if they sold mroe stuff wouldnt they pay more tax? wouldnt it be better (well not necesaarily from a profit point of view) to pay less tax?

Businesses want to sell stuff no matter what time of year it is. Money in the hand today is worth more than it is tomorrow.

Im not an accountant but im pretty sure its contingent on the type of accounting methods they employ. ie: Cash or Accruals.

Using the Accurals system, unsold stock is considered an asset and is taken into account (ie: pay tax on it) at the end of the year. Using the Cash method, you only pay tax on it when it is sold and converted into cash.

Also, (and again, dont hold me to this) but in theory, selling their older stock (usually the stuff thats on sale) helps them realise any losses because they'd rather sell the stuff for a bit less, then have it sitting on the shop floor and have to pay tax on the full value of the item.