Inventory: FIFO, LIFO
First in, first out, or FIFO, is a method businesses use to value inventory in which assets produced or acquired first are sold, used or disposed of first, while the most recently produced or acquired assets are sold, used or disposed of last.
Last in, first out, or LIFO, assumes that assets produced or acquired last are sold, used or disposed of first, while those produced or acquired earlier are sold, used or disposed of last.
Inventory turnover is a ratio that shows how quickly a company uses up its supply of goods over a given time frame. Inventory turnover may be calculated as the market value of sales divided by ending inventory, or as cost of goods sold (COGS) divided by average inventory.
The term "cost basis" refers to the original value of a security you own. When you sell a stock, bond or mutual fund, you use the cost basis to determine your profit or loss, which in turn affects the amount of tax you owe. There are multiple methods for determining one's cost basis, one of which is the "first in, first out" method or FIFO.
Otherwise known as the "bottom line", net income is the most commonly used indicator of a company's profitability. Learn more about how it an investor's decision to own or sell a stock.
Learn more about the costs that go into production.
Working capital is one of the basic metrics used to evaluate a company's financial health. Find out what it can tell you about a stock and learn how to calculate it.
The balance sheet is a basic accounting tool used by individuals, business owners and even large corporations to track net worth. Discover its main components and how they work together.
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