According to the LIFO method of inventory valuation, the most recently manufactured or purchased goods are presumed to be used or sold first. Although LIFO is not frequently used in actual inventory movement, it is crucial for accounting purposes, particularly in settings where costs are on the rise. LIFO has an impact on profitability analysis, tax obligations, and inventory valuation in supply chain management. It might not, however, accurately represent inventory flows, and it may result in obsolete inventory being kept on hand for longer, increasing the risk of spoiling or obsolescence.
