[Verse 1] When companies buy inventory at different costs They need a method so nothing gets lost First In First Out or FIFO's the way Oldest items get sold first every day Like a grocery store with milk on the shelf Rotate the stock to maintain your wealth [Chorus] FIFO, LIFO, Weighted Average too Three methods for inventory, which one will you choose FIFO first, LIFO last, Average smooths it out Learn these methods well, that's what CFA's about [Verse 2] Last In First Out, that's LIFO's game Newest inventory sold, costs aren't the same When prices are rising, COGS goes up high Profits look lower, taxes say goodbye But cash flow improves when tax bills decline LIFO's the choice when saving's your sign [Chorus] FIFO, LIFO, Weighted Average too Three methods for inventory, which one will you choose FIFO first, LIFO last, Average smooths it out Learn these methods well, that's what CFA's about [Bridge] Weighted Average takes all costs in stride Divides by quantities, smooths the ride No extreme highs, no extreme lows Steady and stable, that's how it goes IFRS says LIFO's not allowed US GAAP permits it, standing proud [Verse 3] Balance sheet values change with each way FIFO shows current costs at play LIFO's outdated when prices inflate Weighted Average finds the middle state Income statements tell different tales Choose your method before the ship sails [Chorus] FIFO, LIFO, Weighted Average too Three methods for inventory, which one will you choose FIFO first, LIFO last, Average smooths it out Learn these methods well, that's what CFA's about [Outro] Financial analysts need to know How inventory methods make numbers flow Compare the companies, adjust the books Master these concepts with analytical looks
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