Financial Reporting and Analysis Q247

0. Which ratio is most likely higher for a company using LIFO method to account for inventory, during a period of rising prices, when compared against a company using FIFO method?

Answer
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Option : C
Explanation : During a period of rising prices, ending inventory under LIFO will be lower than that of FIFO and cost of goods sold higher; therefore, inventory turnover (CGS/average inventory) will be higher.

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