If your inventory costs are increasing, LIFO allows you to reduce income taxes and keep more cash in your business. Any business with rising inventory costs. It does not matter how large or small the inventory items are. D.C. It is automatically approved. Because LIFO generates cash, interest-free.
Businesses find it more challenging today than ever to stay competitive.
It is not often that an interest-free loan is made available. You do it even though you know you will pay taxes on the contributions and the earnings some day. The reason every business should consider LIFO accounting, is that, properly invested, deferred income taxes compound into hundreds of thousands and even millions of dollars. Unless you have significantly decreased inventory, or inventory unit costs have declined during the year, your LIFO investment account should increase even when inventory levels drop. Inventory turns have absolutely nothing to do with LIFO benefits.