What's the Best Inventory Costing Method for Your Business? (FIFO, LIFO vs. Moving Average)

If you sell physical products, your inventory isn't just stock sitting on a shelf—it's a major asset that directly impacts your profits, taxes, and financial reporting.

In this episode of The Secret Life of Inventory, we break down inventory valuation methods in simple terms. You'll learn the difference between price and cost, how Cost of Goods Sold (COGS) works, and why choosing the right inventory costing method can have a big impact on your business.

We cover the three most common inventory costing methods:
→ FIFO (First-In, First-Out)
→ LIFO (Last-In, First-Out)
→ Moving Average Cost

Plus, we explain the differences between IFRS and GAAP accounting standards, discuss which industries benefit most from each costing method, and share practical advice for choosing the right approach for your business.

Whether you're managing inventory in spreadsheets, evaluating inventory software, or trying to better understand your financial statements, this episode will help you connect inventory operations with accounting fundamentals.

Podcast Produced by: inFlow Inventory
Hosted by: Jared Plumb & Melinda Tse

📖 Read our blog to learn more:
→ Inventory Valuation Methods: https://www.inflowinventory.com/blog/inventory-valuation-methods-costing
→ FIFO vs. LIFO: https://www.inflowinventory.com/blog/fifo-vs-lifo/
→ Moving Average: https://www.inflowinventory.com/blog/moving-average-formula-for-calculating-cost
→ Inventory Accounting: https://www.inflowinventory.com/blog/inventory-accounting

0:00 - Teaser
0:26 - Intro
1:37 - What is inventory valuation?
2:17 - Difference between price and cost
3:55 - Why does the inventory costing method matter?
4:26 - What is cost of goods sold? (COGS)
5:55 - FIFO explained
6:40 - Example of FIFO
8:04 - Best industries for FIFO
8:47 - LIFO explained
10:02 - Why doesn''t everyone use LIFO?
10:37 - IFRS and GAAP explained
11:12 - Best industries for LIFO
12:04 - Moving Average explained
14:26 - Moving Average vs. Weighted Average
15:34 - Downsides of Moving Average
17:04 - How do you know which costing method is best?
18:56 - At what point do spreadsheets start holding you back?
20:01 - Inventory management vs. inventory accounting
21:44 - What to look for in inventory and accounting software
22:55 - Best practices for inventory accounting
24:30 - Outro

✅ Try inFlow Inventory for free and never run out of stock:
https://www.inflowinventory.com/

🎧 Stream our Secret Life of Inventory podcast:
https://youtube.com/playlist?list=PLZPdD9vxalF-TD_uxHmFsPkP5638NrU8-&si=7YIruVL0daUgxCBt

🎙️ Visit our website for show notes:
https://www.secretlifeofinventory.com/

👀 Have an interesting inventory story or business? Apply to be a podcast guest:
https://www.secretlifeofinventory.com/apply-to-be-our-guest/

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Transcript

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When you go into a grocery store, you have the milk in the front that is expires first, and then they're loading it from the back. Right? So they're putting all that new product in from the back, encouraging people Yeah. I know. Like to take from the front, to take that to first in and first out. So it kinda just flows through it. Yeah. I totally do not take it from the back. Yeah. Same. Hello, everybody. I'm Jared. Hi. I'm Melinda. And welcome back to the secret life of inventory. This is a show where we dive deep into the unseen world of inventory management, revealing the hidden mystery that help businesses like yours optimize their workflow and succeed. Today, we're exploring a topic that sits at the core of every product based business, but it doesn't always get the attention it deserves, and it's inventory costing methods, also known as inventory valuation. And why does this matter? Well, inventory isn't a bunch just of products sitting on your shelves, it actually is money on your balance sheet. And which inventory valuation method you're using is gonna directly impact your profit, your taxes, and how your financial health looks. Even if you have the exact same sale, your numbers can be very different. From FIFO, LIFO, and moving average, we'll guide you through these three main costing methods and show you how each one works in real world examples. So hopefully by the end of this episode, you're gonna know which costing method is the right fit fit for your business, and you're also gonna be able to avoid any mistakes when it comes to choosing one. And we're also gonna go through how inventory software is gonna make this a whole lot easier. Alright. So we have a lot to talk about today. Yes. So let's start with the foundations of inventory valuation. Mhmm. This is a concept that catches a lot of business owners off guard because two companies can buy from the same suppliers, sell the exact same products at the same prices, and still report different profits. So, Jared, could you define what is inventory valuation, and why should business owners care? Yeah. So, essentially, inventory valuation is like the practice of assigning, like, a dollar amount to your inventory. And the reason it's so important is because it directly impacts, you know, your profit margins and how much you're gonna be paying taxes, things like that. Right? But before you even think about inventory valuation method, which one you're gonna use, you really have to truly understand the true cost of your products. And what's the difference between price and cost? So that's actually a great question. This is something that kinda trips up a lot of people when they first start out calculating their COGS and whatnot. So, essentially, your price is the price that you're actually charging your customers for the products that you're selling, and the cost is the full cost that it costs your company to actually get those products ready for sale. So it's not just what the supplier charges. There's more to it? Yes. And that is the important part. Right? It's not just the wholesale price, whatever you paid for it. Everything that factors into that would be things like, you know, customs, duty, shipping, things like that. They all need to be accounted for when you're thinking about your true cost. A good way to think about it would be if, for example, if you bought products, anything that is just directly impacted by buying that product, like I said, shipping duties and stuff, that needs to be included. But if you have things that you would still be paying regardless of whether or not you made that purchase so think of things like rent, utilities, those are overhead costs that you're gonna be paying regardless. Right? So if those are still in place regardless, those wouldn't be included in your cost. And there's a term for that, right, that encompasses the duties and taxes? Yeah. So it's actually called landed costs. That so your full landed cost, what it which what what it should be. It also is called non vendored costs. So those are the two ways of thinking about it, your landed costs or your non vended costs. Actually, if you're using inventory software, generally, there's a line item in your purchase order where you can put your non vendored costs as either a percentage or a dollar amount. So it just kinda makes calculating all of your your true costs a lot easier. Yeah. That's good to know. It's, very specific terms for what you're calculating instead of everything blended together. Exactly. Exactly. Can you explain why the inventory costing method matters so much? Yeah. So, I mean, inventory isn't like how you sell things, obviously. It's not very clean. Things are gonna change over time. The prices are gonna fluctuate. Right? So, you know, for example, maybe one day you bought a product that cost ten dollars. The next time you buy it, it costs twenty dollars. And then you when you sell that product, or does it cost ten dollars? Does it cost twenty dollars? Like, those are the types of questions that inventory valuation methods, they aim to answer those questions. Right? The inflation. Yeah. Ten to twenty. Just like that. Okay. So before we go into the three main costing methods, can you clarify what does cost of goods sold mean or COGS? So cost of goods sold is, basically, it's the direct, cost it takes for you to sell products, you know, in a given period of time. So there's a formula to actually calculate that. So essentially, it is your beginning inventory plus your purchases made in that period minus your ending inventory will give you your COGS. I do want to say that if you are a manufacturer, it works a little bit differently. So essentially, the purchasing item in the COGS formula, that would be replaced with the cost of good manufactured because you're not actually purchasing products to sell. You're manufacturing them. So we won't get too in the weeds about that formula today. Different episode. Yeah, different episode. But essentially, it's just all the costs associated with producing that product. So your direct labor, your raw materials, you know, your direct overhead, all that stuff would be calculated, and then you would then use that in your COGS formula as your purchases. And why is cost of goods sold so important? So cost of goods sold actually directly impacts, you know, how much profit you make because you deduct it from your revenue. So it will actually directly impact how much taxes you pay, essentially. So COGS is basically the what? The total dollar amount of inventory sold during a period. then And the inventory costing methods are the how we assign the prices to these products. That's a perfect way of looking at it. Yeah. Okay. Let's move on to breaking down the three main costing methods. And how about we start with the most popular one worldwide, which is FIFO? So could you break down, what does FIFO mean, and how does it work? So FIFO stands for first in, first out, and it actually works just the way it sounds like. You're going be selling the first products that you bring in. You're going be selling those first. Right? So it's going to kind of kind of mimics the flow of how inventory would actually just inhibit intuitively how you would move through your system. So yeah, basically, it's very popular, as you said. So we want to talk about the milk example. Yeah, the milk example is a perfect example. When you go into a grocery store, you have the milk in the front expires that first, and then they're loading it from the back. Right? So they're putting all that new product in from the back, encouraging people Yeah. I I know. It's like to take from the front, to take that to first in and first out. Yeah. So it kinda just flows through it. Yeah. I totally do not take it from the back. Yeah. Same. Can you give an example with numbers for FIFO? Yeah. Yeah. So let's look at a say you sell basketballs, for example. And let's say you in a month period, you start off that month and you have a hundred basketballs that you paid ten dollars for. During that month, bought another two hundred basketballs that you paid twenty dollars for. Right? So then you sell fifty basketballs. Right? So under the FIFO costing method, you would be selling the balls from the original batch. So the balls that cost ten dollars each. So you would be spending five hundred dollars from that would be your sales. Right? So plugging that all in into the cost of goods formula, you would have one thousand for your beginning inventory plus your purchases, which would be four thousand, and then your ending inventory. This is kind of where costing methods really affect your COGS. So this is going be the number that kind of changes. So for your initial bucket, you now only have five hundred dollars because you sold fifty of those ten dollars balls, but you still have the full amount of purchases that meet. So you have that full four thousand. So together, you have forty five hundred dollars. So you're you have five thousand minus forty five hundred. So the COGS under the FIFO method would be five hundred dollars for those. So for FIFO, if I'm expensing the cheaper older stock at ten dollars instead of twenty dollars, the cost of goods sold would be lower, which reports a higher profit. Yeah. That's an it's exactly it. And it's kind of a double edged sword because, obviously, higher profits is good. You like that. You want that for your business to have higher profits. But, of course, with higher profits comes higher tax rates. Which industry is the best fit for FIFO? I mean, FIFO is just a it's it's very popular, like you said. In fact, we we ran a survey of four hundred operators recently, and we found that fifty percent of them actually use FIFO. Right? More than half. So more than half. Yeah. So it's a lot of people are using for it many different use cases. But the most common ones are obviously when there's expiration dates that come into play. Think of food and beverage, pharmaceuticals. Those are really, really popular industries for the FIFO. But even things like fashion and apparel, because obviously, a lot of seasonality and trends that come along with that industry. Yeah. And then there's, of course, electronics. That because a lot of the times electronics, of course, technology moves at breakneck speeds, and things kind of become obsolete pretty fast. Right? So you want to make you're sure kind of cycling through that inventory as quickly as possible. So if FIFO is first in, first out, then what about LIFO? What does that stand for, and how does it work? Yeah. So LIFO is essentially the opposite of FIFO. It stands for last in, first out. So, essentially, the way it works is your whatever item that you bought last, you're actually selling that one first. You know? So it's a little counterintuitive. Yeah. But yeah. Can you explain with numbers? Yeah. So let's go back to the basketball example. Right? So the same thing, you have one hundred your balls, and then your two hundred balls to one thousand dollars and four thousand dollars Again, it's going to be your ending inventory that's going be affected by this. So since we're going by LIFO, we're actually going to be selling balls from the bucket that cost twenty dollars So those two hundred balls that cost twenty dollars that's where we're taking from. So our ending inventory will actually be one thousand from our initial inventory plus what's left of the two hundred balls. Right? So there's gonna be three thousand dollars of inventory left from that, which gives us four thousand dollars So five thousand minuteus four thousand gives us a COGS of one thousand dollars when we're using, like, the LIFO method for that. I see. So for FIFO, it was five hundred dollars for the cost of goods sold. Mhmm. And then for LIFO, it's a thousand dollars. So the number doubled. Yeah. It's yeah. That's exactly it. I mean and that's great because, you know, you're when you're doing your taxes, you've actually on paper, you've made less profit. Right? So you're actually paying less taxes. So it's a great way to do that. That sounds almost too good to be true. What's the catch? Like, why does everyone just do it then? That is a great question, And the answer is actually kind of a twofold. Number one is it doesn't really match, you know, what we talked about before how kind of inventory typically flows through a business. Right? Generally, when you're buying things, you're kind of selling it in the order in which you bought it. It just kind of makes sense that way. You don't want things really don't really want things on the shelf just collecting dust. Right? You want everything to kind of move constantly. Should be a flow of inventory. But the second one, which is actually really the most important, is it's actually banned under the IFRS. So you can't use it. So it's banned under the IFRS. And what does that mean for business owners? So the IFRS is like a global accounting standard. It's it's accepted worldwide, and you're so, basically, the only country that you're allowed to use, LIFO in is the United States. And you you can do that under the GAAP standard. But other than the United States, it's actually banned everywhere else. Oh, that's good to know. Yeah. So, basically, LIFO is the US only method that requires more effort, and the main appeal is tax savings during inflation. That's exactly right. Yeah. And what about industries? What is LIFO good for? So LIFO is generally good for, you know, high costs, you know, high cost products that tend to not really degrade or, you know, non perishable items. So, you know, think of things like oil or metals, you know, industrial machinery, stuff that can sit on the shelf and not really lose value or go bad or anything like that. That's pretty much the industries that really utilize it the most. So I will say one thing to keep in mind is if you are using LIFO and you're not supposed to be using LIFO and you're caught using it, they will actually make you redo all of your books under the FIFO method. You'll actually have to repay You can can redo everything. Yeah. You'll redo not only have to do all the work to redo it, but you'll have to repay any taxes taxes that that you effectively you dodged using the LIFO method. And on top of that, you'll have to pay penalties as well. So best to avoid it unless you know for sure, for sure, for sure that you're allowed to use it. So only if you're in the US. Yeah. Exactly. Okay. it seems So like LIFO and FIFO are on opposite ends of the spectrum. So how about the third option? Can you tell us what is moving average? Yeah. So moving average is actually you instead of having, like, costing layers where separate you your your your purchases and your existing inventory, you actually blend the cost of everything altogether. So every time you make a purchase, the the cost of those those products will actually be recalculated. So back to the basketball example, there's no separate ten dollars balls or twenty dollars balls. They all just blend together. Right? Exactly. Right. So going back to that example, you have your initial so, basically, you have three hundred balls total that cost a total of five thousand dollars. So you would just take five thousand, and you would divide it by three hundred, which gives you sixteen sixty seven or something like that. Not great at math. Somewhere in there. It gives you a sixteen and some change. Right? So that's the cost of each ball, essentially. Right? So if you were to sell those same fifty balls under the moving average, you would take your remaining inventory. Again, we're gonna go back to the remaining inventory because what's important. And you would take fifty times your sixteen and some change to get your total amount. You subtract that from the five thousand to get your remaining inventory. So you're left with, I think, the COGS for that is around, like, eight hundred and thirty three with some change. And as you can see, it kinda lands, like, right in between where Mhmm. With the FIFO method, you're at five hundred for your COGS. And then the LIFO method, you're at a thousand, where this lands kinda right in between at eight thirty three. You said you're not good at math, but you got the numbers perfectly correct. No. I said some change. So moving average sounds like it's a lot more simpler to calculate. Yeah. It is. I mean, it's gonna really smooth out all those price fluctuations. That's gonna make things a lot more predictable. So I think that's why a lot of companies kind of prefer it over some of the other, valuation methods. And you mentioned how it recalculates on every purchase. Isn't that really hard to track manually? Yes. I mean, that's that is a perfect point. It is really, really Especially if you're not good at math. Yeah. If you're not good at math, you should yeah. Definitely not good to do manually. And it's really why when you're using moving average, most of the time you're using a perpetual inventory system. You kind of have to. Yeah. Because with every purchase, like we said, it's going to be updating. Right? So a lot of the times, you'll be pairing this with inventory software because most modern inventory software systems are perpetual systems, which means they're updating in real time with every purchase and sale that you make so that you don't have to constantly be updating, you know, your spreadsheets and recalculating the cost of every single Yeah. You know, product every single time you make a purchase or a sale or anything like that. Right? I've also heard of the term weighted average. So what's the difference between weighted average and moving average? Yeah. So weighted average and moving average, they're very, very similar. They're very closely related, but they are a little bit different. They have, a nuance to them, and essentially, that's kind of like the the time frame, the when. So weighted average is very specific to a time frame. So you would take the calculation of the average of the cost of your products within a very specific window, where moving average actually just recalculates no matter what the window is. In real time. In real time. Exactly. So instead of, like, looking at one month where you would look at the weighted average for that month, anything purchased in that month or held within that month, you would look at. With moving average, if you bought it last month, it still gets factored in. So it's constantly being updated in real time. And which industries are the best fit for moving average? So moving average is really great for, like, any industry where you're having a lot of, like, you know, very similar products that kinda can be mixed together. You know, you're maybe, like think of it like nuts and bolts and cables, you know, obviously, things that aren't perishable. Yeah. You know? So, you know, wholesale, ecommerce, even like construction field services, a lot of those companies just would use moving averages. It it just makes things a lot simpler when you're, you know, trying to smooth out those those costs. Yeah. Sense. Are there any downsides to using moving average? Yeah. So, I mean, it's kind of, again, a bit of a double edged sword because as it's smoothing out your costs, it it kinda hides a lot potential of trends. You know? So let me give you an example. So if you purchase something from a supplier and they charge you, like, three times what they normally do, unless you're paying really close attention to that purchase price, you wouldn't really notice it because it just gets blended in with the rest of Yeah. Just gets kinda snuck in there. Right? So you don't really notice it at all. So that's a big one. And then secondly, it's really dependent on having incredibly accurate records. If you make one small mistake, that is going to have a ripple effect through all your future cost calculations. So it that small little mistake can actually amplify over time. So you ought to be careful with your numbers. Very careful with your numbers. Yeah. Accounting is notorious for that. Yeah. So just to recap, FIFO shows the lowest cost of goods sold but the highest profit. And then LIFO shows the highest cost of goods sold, but the least amount of profit. And then for moving average, it sits neatly in the middle. Yeah. I mean, that's a great way to look at it. And, generally, that that's generally how it works. I will say there is a caveat to that. If prices fall rather than rise, which doesn't happen very often, especially in the world that we're living in, generally, prices go up, not down. But, I mean, in the case that they would go down, FIFO and LIFO would kind of be flipped. So FIFO would actually have the highest cost, lowest profit, and LIFO would have the the opposite of that. Yeah. If I was a business owner listening right now, how do I know which method to use? Is there like a checklist or what should I how do I know which one is the right one for me? Yeah. I would say you can start by asking yourself a few questions. Right? So there's four good questions that you'd wanna ask about your business. And the first one would be, you know, how does inventory typically flow through your, you know, your business? Do you tend to sell things in the order in which you buy it? In which case, yeah, FIFO makes the most sense in that one. The next one is, does the cost of the products that you buy, does it fluctuate a lot? Because that's going have a major impact on which costing method makes the most sense for you. And then number three is just looking at your industry, your specific industry. Really look at what costing methods are popular. What are your peers doing? And just copy them. Because a lot of the times, if you're Standard. Yeah. There's standards. And if they're doing it, there's probably a good reason that they're doing it. So an easy way of doing it is just looking at what your peers are doing, copying what they're doing. That's a big one. And then finally, number four would be the accounting rules in your region. We talked about the whole, LIFO being banned. So you wanna make sure whichever costing method that you're using, you're actually allowed to use. Right? So make sure that your the options your options are kinda limited depending on where create extra work for yourself. Exactly. So I guess one important thing to note is you can't just flip between methods depending on what's convenient for you at tax time. Right? Yeah. No. That's a great that's a great I'm glad that you brought that up because it is something that you I mean, you have to choose a costing method and stick with it. Right? The IRS actually recommends that you pick one, and then you spend a year on it. And if you want to switch, you actually ask for permission. Right? And it prevents people from kind of just switching their costing method depending on what would be best for their financial recording at the time. Right? So consistency is the golden rule when it comes to accounting now. Telling you to practice commitment. Yeah. When you're Stay committed. Yeah. Okay. So we've mentioned a few times how great inventory software is, but the reality is many businesses still rely on spreadsheets. So can you talk about at what point do spreadsheets start holding you back? Yeah. I'm glad that you gave me a chance to talk poorly about spreadsheets. It's been a while. It's been a while. And you know how much I love it. But, no, seriously, I spreadsheets are fine. You know? When you're a smaller company and you're just first starting out, they work great. But as your SKU count grows, as you have more and more transactions, it just becomes way harder to actually keep track of everything. And that is the time, I think, when it's best to kind of just switch over to a different system. Yeah, sounds tough to track everything manually on spreadsheets. Yeah, and this is where inventory software really starts to shine. It's going to do all those calculations in the background as you're making your purchasing, your sales, and all that. Everything is going to happen in the background. All your cog is going happen in real time getting updated. For example, inflow, we have moving averages as our default. So whenever you purchase new items, it's going to automatically recalculate the cost on the products that you have. Things like that are just going to make the friction a lot less. You don't have to worry about the numbers. Just focus on other the things you're good at. Exactly. Exactly. Next up, let's talk about inventory management versus inventory accounting because these terms can be used interchangeably, but they're actually not the same. So can you tell us what is the difference between inventory management and inventory accounting? Yeah. So, essentially, they are, like, two sides of the same coin. It was a way of thinking about it. They're very close related but very different. So when you're thinking about inventory management, you're thinking about things like reordering, you know, tracking your stock levels, making sure that you have everything in your inventory matches what you have on the books. It's the physical operational side of What is where? Exactly. Right? Where inventory counting is really more of the numbers, the books, how much things cost, how much your what your your COGS is, all that stuff. So anything that has to do with the books Yeah. And the numbers would be, like, the inventory counting element of it. Yeah. Both seem equally important. It seems like inventory management is the what and the where, and then the inventory accounting is the how much all of that is worth. Yeah. Exactly. That's a great way to look at it. And I I think a good inventory management system is gonna kinda marry those two things. You know, for example, Inflow has integrations with two major, accounting software systems, like QuickBooks Online and Xero. Yeah. So it's going So to eliminate that kind of the double entry that comes with having two separate systems. Right? So you they can talk together, which is great. So if you're using Inflow and you're using QuickBooks or Xero, you know, it's going to push all of your financial, like your purchases, all that stuff is going to get into pushed your accounting system. And we actually have a two way payment sync for both Xero and QuickBooks. So it's just going to really eliminate, again, that double entry. Everything's going to stay synced so you don't have to worry about your inventory system says one thing and your accounting system says something else. Right? Time on two different platforms. Exactly. Double laptops. You know? So if someone was shopping for inventory software to pair with their accounting system, what should they be looking for? out So So I'd say there are four things to really look out for when you're looking for inventory software. The number one, obviously, is having multiple costing methods. You want options depending on how your your workflow is, what your industry is. You want the availability to switch costing methods depending on what works best for your business, obviously. And you also want something that has a very clear audit trail. So when you're transferring stock or making sales and stuff, you want a clear trail History. Those the history of that. Exactly. Transaction history of that. That's a big one. We talked about it already, but integrations is another big one because you you know, your inventory system isn't gonna be living in a bubble. It needs to talk with your accounting system. So having an integration, a native integration, I will add, is really important for those. And then reporting tools is another really big one because those are going to be a way for you to really take a look at your costs over time, your profits, slow moving items, all of that stuff, all of the real rich data that's gonna help you with your decision making is gonna be available in those reports. Yeah. Make sure you're making money. Exact that's the most important. Yeah. Yeah. You can do all the work and you're not making money. So what are the best practices that businesses should follow when it comes to inventory accounting? Yeah. I would say number one, and I mean, I guess we're kind of biased here, but software. Having the right software in place is gonna be huge. It's gonna help, again, do all of the the maths for you because no one likes to do the maths. So having that software in place is gonna be a really, really, huge boon for your business for sure. This is something we talk about on the show a lot is performing cycle counts Mhmm. And doing them regularly. No one likes to do cycle counts, but they are very, very important, and they're gonna help you, you know, make sure that what you have on paper, it actually matches what you have on the shelf. So that's a big one as well. Another one is also monitoring your stock levels. So making sure that you don't have a lot of excess inventory because that's just going to eat up into your profit margins over time. So making sure that you're buying just what you need when you need it, that's really important. So those things are really, really great working together. And the next step would be standardizing your procedures. It's really important that everyone on your team is actually doing things the same way. For example, say have you two different team members using two different costing methods, that's going to deeply impact your business. So you have to make sure that you have a standardized process where everyone's doing this everything the same way. And it's replicated with new employees. And it's really it comes from the top down. That's really, really important. And then the last one would be leveraging your reports. Again, going back to those reporting features. If you're using software, the reports are some of the most powerful features that that really comes with. So really using those reports to make those decisions is gonna be vital. It's key. It sounds like the goal is to create a system where not just your inventory data stays accurate, but your financials too. Exactly. And that's a wrap on today's episode. We talked a lot about numbers, but one of the biggest takeaways is you need to understand your true inventory cost so that you can make better business decisions. That's right. So don't just think about the the your purchase price. You wanna factor in things like your shipping, your duties, your fees, all that stuff. And remember what inventory valuation method you use, whether it's FIFO, LIFO, or moving average is gonna have a huge impact on your company's profits, your taxes, all that stuff. Yep. So be sure to choose a method that fits your business and stay consistent with it. Tools like inventory software can really make your life easier by automating cost updates, keeping your data accurate, and syncing with your accounting software. And if you wanna dive deeper into any of the stuff that we've talked about today, we actually have blogs on a lot of it, most of it, in fact. So we will, leave links to those in the description below, and you can take a look if you want and learn more. And if you enjoyed this episode, don't forget to subscribe, leave us a comment, a positive review, and stay tuned for more episodes on how to optimize your workflow. We'll see you the next one. Bye, everybody.