So the $40 million would go to the debt in this case. They would still owe some money to debt (say -$10m in your example). I agree that the inventory can't be

So the $40 million would go to the debt in this case. They would still owe some money to debt (say -$10m in your example). I agree that the inventory can't be worth much. I mean if it was worth that much it would be the main story, not the sale. In your example the inventory is worth over 2x the IP! Let's see, between Feb 2015 and July 2016 they sold about 800,000 units. (http://www.wareable.com/wearable-tech/how-many-apple-watches-sold-2016 http://www.wareable.com/wearable-tech/how-many-apple-watches...) So that means if they sold 800k units in 18 months, that is about 44,444 units/month. If they keep around one quarter of inventory, that would be about 130,000 units. (not accounting for deceleration). On Amazon they go for about $60/pop (and discounts will deepen). So they have about $8 million in inventory on the high end. This doesn't take into account the cost of goods sold. The question is: how much debt did they have?