The Changing LIFO-FIFO Dilemma and Its Importance to the Analysis of Financial Statements (Last in First Out-First In First out‪)‬

This paper examines how the probable demise of the LIFO inventory costing method will affect companies currently using LIFO as well as the financial analysis of those companies. Key financial ratios are examined along with how these ratios may be affected by the switch away from LIFO. A mixed bag of changes to key ratios, both improvements and deteriorations, are presented, along with a discussion of more complex topics for whom the impact of these changes are less clear. INTRODUCTION AND BACKGROUND