Why would an Analyst perfer LIFO COGS and FIFO inventory?
lets see LIFO COGS is more accurate because it reflects current pricing info. FIFO Inv is more accurate because it reflects current pricing info.
An analyst would use LIFO COGS because it provides a better measure (more recent measure) of how much the inventory we sold this period actually costs in (terms of the current period.) Use FIFO inventory because it is closer to replacement cost of the inventory than LIFO. In other words, if we wanted to value how much the inventory is worth, we use the most recent costs (provided by FIFO). It is late so I apologize if that makes absolutely no sense.
Sorry for being redundant, ancientmtk got to it faster.
awsome thank u
LIFO - good for NI to reflect a conservative profit (high COGS - reflective of current prices) FIFO - good for BS - good was to show lots of inventory balance (using low COGS)