How Do I Use the Numbers?

How Do I Use the Numbers?

Learning Objectives

  1. Convert reported LIFO cost of sales and inventory balances to FIFO cost of sales and inventory balances.

  2. Compare and contrast inventory turnover, gross margin, and profit margin based on FIFO accounting methods across companies, industries, and time.

  3. Differentiate the consequences of inventory accounting methods on ratios.

  • Click the Express Route video below for an overview.
  • Click one of the topics in the Scenic Route video for more explanations and real company examples.
  • If you’re ready to start the exercises, click the exercise link below. Go back to the Scenic Route topics if you need more help.

Express Video:

 Click here for the Express Route video [xx minutes]

Scenic Videos:

Click one of the topics below for a Scenic Route video


1. xxx [xx minutes]

2. xx [x minutes]

3. xx [xx minutes]


 Ready to do exercises?   Click for exercises for this module


  • xxxxx


Key terms:

  • xxx
  • xxx-  

Key formulas:

  • Inventory turnover = cost of sales / average inventories
  • Gross margin = (revenues - cost of sales) / revenues
  • Profit margin = pretax profit / revenues