Formula: FIFO Inventory conversion from LIFO

CFA Level I Glossary

To restate LIFO inventory to FIFO, add the LIFO reserve: Inventory_FIFO = Inventory_LIFO + LIFO Reserve. The reserve is the cumulative amount by which FIFO inventory exceeds LIFO inventory when prices have generally risen. This balance-sheet bridge is step one in ratio comparability. Forgetting the deferred tax effects on equity when converting is the next common miss.

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