Inventory Valuation

Inventory valuation refers to the method used to determine the value of a company's inventory at a given time. It impacts financial reporting and taxation. Common methods include First-In, First-Out (FIFO), where the oldest items are sold first, and Last-In, First-Out (LIFO), where the newest items are sold first. Accurate inventory valuation helps businesses understand their financial health, make informed purchasing decisions, and ensure they pay the correct taxes. It ultimately aids in assessing profitability and managing resources effectively.