单选题 The best way to compute an inventory turnover ratio is to use: A. LIFO for COGS and FIFO for average inventory. B. FIFO for both COGS and average inventory. C. LIFO for both COGS and average inventory.

【正确答案】 A

【答案解析】Inventory turnover makes no sense at all for firms using LIFO due to the mismatching of costs ( the numerator is current while the denominator is historical). FIFO based inventory is relatively unaffected by price changes and is a good approximation of actual turnover. In this way, current costs are matched in the numerator and denominator.