Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 81

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 5
Chunk 81
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 equipment, the extent to which we utilize operating leases for new facilities and equipment, and the levels of shipments and changes in the volumes of customer orders.

Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from April 1, 2024 to March 31, 2025 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

Table of Contents

Critical Accounting Estimates

This discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with U. S. generally accepted accounting principles (U. S. GAAP). The preparation of these consolidated financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. For more information on our significant accounting policies, refer to Note 2 of Notes to Consolidated Financial Statements included in Part III, Item 18, in this Report Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The Company believes the following are its critical accounting estimates:

Inventories

Our inventories are stated at the lower of cost or net realizable value. Cost is determined on the weighted average basis. Work-in-progressand finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process.

The Company periodically performs an analysis of inventory to determine obsolete or slow-movinginventory and determine if its cost exceeds the market value. The market value of the inventories are estimated based on the current market situation and historical experience on similar inventories.

Any changes in the assumptions would increase or decrease the amount of inventories write-downor the related reversals of write-down. The changes in the write-downwould affect the Company’s profit or loss during the year.

Impairment of long-lived assets

Our long-livedassets are included in impairment evaluations when events and circumstances exist that indicate the carrying value of these assets may not be recoverable. In accordance with ASC No. 360, “ Property, Plant and Equipment,” the Company assesses the recoverability of the carrying value of long-livedassets by first grouping its long-livedassets with other assets and liabilities at the lowest level for which identifiable cash flows largely independent of