Answer: total asset turnover than LIFO.

## Explanation In periods of rising prices with constant inventory quantities: **FIFO (First-In, First-Out) vs LIFO (Last-In, First-Out):** 1. **FIFO** assigns the oldest (lowest) costs to cost of goods sold (COGS) and the newest (highest) costs to ending inventory. 2. **LIFO** assigns the newest (highest) costs to COGS and the oldest (lowest) costs to ending inventory. **Impact on Financial Ratios:** - **Total Asset Turnover = Sales / Average Total Assets** - Under FIFO, ending inventory (and thus total assets) is higher due to newer, higher costs. - Under LIFO, ending inventory is lower due to older, lower costs. - With the same sales, FIFO has higher total assets in the denominator, resulting in **lower total asset turnover** than LIFO. - Wait, the question asks where FIFO results in a **higher** value than LIFO. Let me re-examine: Actually, FIFO has **higher inventory values** (and thus higher total assets) than LIFO in rising prices. Since total asset turnover = Sales / Average Total Assets, with the same sales numerator, FIFO has a larger denominator (higher total assets), so FIFO's total asset turnover is **LOWER** than LIFO's, not higher. Let me check the options again: A. **total asset turnover than LIFO** - FALSE (FIFO has lower total asset turnover) B. **working capital turnover than LIFO** - Working capital = Current Assets - Current Liabilities. FIFO has higher inventory (current asset), so higher working capital. Working capital turnover = Sales / Average Working Capital. With same sales, FIFO has higher denominator, so LOWER working capital turnover. C. **days of inventory on hand than LIFO** - Days of inventory on hand = (Ending Inventory / COGS) × 365. FIFO has higher ending inventory and lower COGS than LIFO. Both factors increase the ratio, so FIFO has **higher days of inventory on hand** than LIFO. Therefore, the correct answer is **C**. **Key Points:** - Days of inventory on hand = (Ending Inventory / COGS) × 365 - FIFO: Higher ending inventory, lower COGS → Higher ratio - LIFO: Lower ending inventory, higher COGS → Lower ratio - In rising prices, FIFO shows better inventory management efficiency (lower COGS) but actually has higher days of inventory on hand.

Author: LeetQuiz .