LIFO-FIFO, Accounting Ratios and Market Risk

THE LIFO-FIFO CHOICE MAKES NO SIGNIFICANT DIFFERENCE IN THE USE OF CERTAIN RISK-ORIENTED ACCOUNTING RATIOS FOR MAKING INTERCOMPANY COMPARISONS. SIMILARLY, IN COMPARING RANKINGS BASED ON ACCOUNTING RATIOS TO RANKINGS BASED ON THE MARKET 'BETA', THE LIFO-FIFO CHOICE HAS NO SIGNIFICANT INFLUENCE. IN THIS STUDY, USING PRIMARILY REAL-COMPANY DATA AND CONSIDERING RATIO EFFECTS, IT HAS BEEN FOUND THAT INTER-COMPANY COMPARIBILITY IS UNHINDERED BY THE PRESENCE OF LIFO AND FIFO. WHILE MORE RESEARCH IS NEEDED ON OTHER ASPECTS OF THE LIFO-FIFO ALTERNATIVE, AND ON OTHER ACCOUNTING ALTERNATIVES, THESE FINDINGS SUGGEST THAT THE OFTEN-RECOMMENDED REDUCTION IN ALTERNATIVES MAY BE UNNECESSARY. TABLES. APPENDICES. REFERENCES.