Cash on balance sheet LIFO/FIFO

[rexthedog]

Hi,
I read that cash on the balance sheet will be higher for LIFO than FIFO.
Is this because LIFO = Higher COGS (inflationary env) = Lower NI. = Lower Taxes = higher cash on Balance sheet??
Thanks,

 

[Flashback]

The only impact on cash flow using LIFO instead of FIFO is in tax shield, therefore less Corp. income taxes paid means higher cash flow So, yes you’re correct..

 

[300hoursoverand]

Yes, what you have said is correct.
Also, make note of what happens in situations other than rising prices.
This helps in understanding the concept rather than memorising it.
Hope that helps.