However, various studies show that LIFO, LIFO or other inventory pricing methods have little influence on the stock price of listed companies. The deeper reason is that the main stock holders in the US stock market are institutions, and individual retail investors may account for less than 20% of the market. When evaluating stocks, institutions are professionals. In fact, when estimating the stocks of listed companies, professionals pay more attention to the company's ability to generate cash in the future, rather than looking at the figures in financial reports very superficially. We are all educated people and will not be fooled by such small means.
Of course, there are many examples of changing accounting methods to make financial reports look better. Chrysler changed the current loss of $20 million from LIFO method to LIFO method into a loss of $7.6 million, but at the same time, they delayed the tax paid by the tax bureau by 14 through LIFO method, which directly led to an overpayment of $53 million. But in order to make the numbers look better, this is certainly not the only reason why Chrysler changed its inventory pricing method. You should indicate in the financial report that you have changed the accounting method, and you should restate all the data of the past few years in the current financial report according to the new accounting method. Also explain why the accounting method has changed. At this time, there should be some other practical reasons to support changing the pricing method. We are all educated people. You can change it today or tomorrow. If you change the financial report, shareholders will not trust its integrity. Shareholders are not fools.
As for the circumstances under which LIFO method is more suitable, the advantages and disadvantages of LIFO method are beyond the discussion scope of the questions raised in the caption, so I won't go into them one by one.