SECRET to Analyzing Retail Stocks - LIFO vs FIFO Inventory | Summary and Q&A

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June 2, 2022
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Learn to Invest - Investors Grow
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SECRET to Analyzing Retail Stocks - LIFO vs FIFO Inventory

TL;DR

Learn about FIFO and LIFO inventory methods and how they impact stock performance in the retail sector.

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Questions & Answers

Q: What are FIFO and LIFO inventory methods?

FIFO stands for first in, first out, and it means selling the oldest inventory first. LIFO stands for last in, first out, and it means selling the newest inventory first. These methods determine the order in which inventory is accounted for and sold.

Q: How do FIFO and LIFO inventory methods impact stock performance?

Companies using FIFO generally have better profit margins during times of rising inventory levels and steady inflation. On the other hand, companies using LIFO might benefit when inventory levels decrease, leading to lower costs and potentially higher margins.

Q: Which retail stocks use FIFO inventory method?

Examples of retail stocks that may use FIFO include companies like Amazon, Lowe's, Hanes, Crocs, and Under Armour.

Q: Which retail stocks use LIFO inventory method?

Retail stocks that may use LIFO include Walgreens, Rite Aid, Target, Macy's, and Academy Sports.

Summary & Key Takeaways

  • The video explains FIFO (first in, first out) and LIFO (last in, first out) inventory methods and how they are used in different types of companies.

  • It highlights the impact of these valuation methods on the numbers and financial performance of retail stocks.

  • The video discusses how inventory levels and changes in inventory methods can affect stock prices and profit margins for retail companies.

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