This number can help you determine whether you need to order more inventory, or whether you are selling your products too quickly. It tells you how often your inventory is sold and replaced. This inventory analysis method considers how scarce an item is and how easily you can acquire it.Inventory turnover is an important metric for businesses to track. To learn more about LIFO, FIFO and other cost accounting methods, read The Key to Using Inventory Cost Accounting Methods in Your Business. In First Expire, First Out (FEFO), expiration dates drive the sales, with companies exhausting the stock with the earliest expiration date first. FIFO companies sell the inventory first that they bought first. LIFO companies sell the inventory first that they bought last. The accounting cost of inventory also depends on whether a company uses Last in, First Out (LIFO) or First in First Out (FIFO) accounting. Often used in manufacturing, this analysis measures the inventory based on high, medium and low cost.
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