What are the benefits of using FIFO in inventory management?

What are the benefits of using FIFO in inventory management?

FIFO, or First In, First Out, helps reduce spoilage and ensures older stock is sold first, improving inventory turnover.

How does FIFO affect cash flow?

Using FIFO can improve cash flow by minimizing losses from expired or obsolete inventory, leading to better financial health.

Are there any downsides to using FIFO?

Yes, FIFO can lead to higher tax liabilities during inflation, as older, cheaper inventory is sold first.

Is FIFO suitable for all types of products?

FIFO is ideal for perishable goods but may not be suitable for non-perishable items where cost considerations vary.

Can you give examples of industries that benefit from FIFO?

Industries like food and beverage, pharmaceuticals, and retail often benefit from FIFO to manage inventory effectively.