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LIFO vs. FIFO: Choosing the Right Inventory Valuation Method

 
  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
   
  Open as PDF Open the entire article as a downloadable PDF (No form completion is requested.)  
     
  Article Summary  
Choosing the right inventory method - LIFO vs. FIFO - is a critical inventory management decision for manufacturers, wholesalers and retailers.

The significance of choosing Last-In, First-Out (LIFO) accounting or First-In, First-Out (FIFO) accounting is found in how each inventory valuation method impacts inventory value, cost of goods sold, net income and income taxes.

Reviewed are definitions of LIFO and FIFO accounting and dollar-based examples of how they impact cost of goods sold and taxes differently.

A company's choice of one over the other is also be informed by economic conditions, inventory pricing, accompanying reporting requirements, and the impact of lower net income on borrowing or investor interest.

Bringing both client-side and services-side expertise in weighing the pros and cons of LIFO and FIFO, a CFO services partner collaborates with executives and their teams to discover, select and implement the right inventory valuation method.

  Open as PDF Open the entire article as a downloadable PDF (No form completion is requested.)  
     
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