Inventory valuation determines the cost of goods sold and the value of remaining stock. The method you choose affects your profit and tax calculations.
FIFO — First In, First Out
FIFO assumes the oldest stock is sold first. This is the most common method and reflects real-world stock movement for most businesses (especially perishables).
- Lower COGS when prices are rising (older, cheaper stock used first)
- Higher reported profit
- Closing stock valued at latest (higher) prices
- Recommended for most businesses
LIFO — Last In, First Out
LIFO assumes the newest stock is sold first. This is less common and not permitted under IFRS, but available for management reporting.
- Higher COGS when prices are rising
- Lower reported profit (tax advantage)
- Not allowed for statutory accounts under IFRS
- Useful for internal pricing decisions only
Setting your valuation method
1
Go to Settings → Inventory Settings.
2
Select your preferred Valuation Method: FIFO, LIFO, or Weighted Average Cost.
3
Click Save. This applies to all new stock movements going forward.
⚠️Note: Changing valuation method mid-year can significantly impact your financial statements. Consult your accountant before making this change on a live account.