The inventory turnover ratio will be higher when LIFO is used during periods of increasing costs. The reason is that the cost of goods sold will be higher and the inventory costs will be lower under LIFO than under FIFO.
What is the effect on financial ratios when using LIFO instead of FIFO?
To learn more, see the Related Topics listed below:
Related TopicsAccounting Principles Inventory and Cost of Goods Sold Financial Ratios Working Capital and Liquidity