2026 - Analysis of Inventories (Level 1)

Unlock a complimentary chapter from our cutting-edge 2024 Level 1 package! Dive into 10 bite sized video lessons on analyzing inventories in financial statements. Plus, strengthen your understanding with 10 end-of-chapter questions with video explanations!

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What's inside:

Chapter 7: Inventories

This chapter covers inventories and the different valuation methods used to calculate the values of both cost of goods sold and ending inventory for a firm. Different cost flow assumptions, including first-in, first-out (FIFO), last-in, last-out (LIFO), average cost, and specific identification, are introduced. Finally, advanced inventory concepts such as LIFO reserves, LIFO liquidations, and inventory write-downs are covered. Throughout, the chapter emphasizes the importance of analysts understanding how these concepts can impact financial statement analysis.

Chapter 7 Outline

Inventories - Why Does It Matter?

Introduction to Inventories

Specific ID, FIFO, Weighted Average

LIFO, Calculation of Cost of Sales

Periodic vs. Perpetual Inventory Systems

LIFO Reserves and LIFO Liquidity

Inventory Method Changes

Inventory Adjustments

Presentation and Disclosure

Inventory Ratios

Chapter 7 Questions

Chapter 7 Answer Key

Chapter 7 Question 5 Solution Video

Your coach for this lesson

Tom Adams, Ph.D., CPA, CGMA

Tom Adams is our lead instructor at Accounting Coaches LLC helping create the curriculum, materials, lectures and questions our customers use to prepare for the FSA topic for the CFA exams. Tom is able to leverage his experience as he is also an Accounting professor at La Salle University’s School of Business where he teaches a variety of accounting topics to both undergrate and graduate students while also publishing finance and accounting research papers. In addition, he has experience training young professionals in their preparation for the Certified Public Accountant (CPA) examination too. Tom holds his Ph.D. in accounting from Temple University.

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