Footnote:/ Bottom of the slide: Substance: How the numbers were computed? Sales are recognized at the “point of sale,” which occurs when merchandise is taken in an “over-the-counter” transaction or upon receipt by a customer in a shipped transaction, such as through the Internet and catalog channels. Revenue associated with gift cards and merchandise credits is recognized upon redemption. Sales are reported net of returns, sales tax and other similar taxes. Shipping and handling fees billed to customers are included in net sales. The Company maintains a reserve for potential product returns and it records, as a reduction to sales and cost of sales, its provision for estimated product returns, which is determined based on historical experience.
Additionally, outside of the U.S. the Company operates certain TIFFANY & CO. stores within various department stores. Sales transacted at these store locations are recognized at the “point of sale.” The Company and these department store operators have distinct responsibilities and risks in the operation of such TIFFANY & CO. stores.

Footnote: Swelling inventories may be an indicator of a number of factors, not all of which are necessarily negative. High growth companies tend to have rapidly increasing inventory levels (which are necessary to accommodate increased sales). However, this could be a warning sign, depending on the nature of the business. Stockpiles of perishable inventories or those that become obsolete quickly may present a problem given a rapid downturn in sales or the development by a competitor of a better product. High inventory levels represent the potential for decreased production or a need to decrease prices to move inventory (which will affect gross margin).
An appraiser should compare balance sheet inventories (which represent a picture of inventories at a point in time) with the average