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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: OldAIMGuy who wrote (15721)4/26/2001 12:30:34 PM
From: LemonHead  Read Replies (2) of 18929
 
Hi Tom, LIFO is important and I guess I should have worded that differently. But I think you see the point I was trying to make. It is and has been a constant issue with my crew here at the shop. I preach constantly that they have to know the net dollar amount of a transaction in order to understand what the "per cent" means in relationship to that transaction. For example if I sell a light fixture for $10 at a gain of 42.8% and then a single screw that cost $.01 for the same "per cent" gain, does it really make sense? Notta!!! Matrix pricing balances the transaction costs throughout the inventory if properly applied.

I received this LIFO formula from fellow AIMer Don Carlson.

Hi Keith,

The calculation should be:

1. Gain (bought at $7, sell at $10)
[($10 / $7) -1] * 100 = 42.9% LIFO gain.

2. Loss (bought at $10, sell at $7)
[($7 / $10) -1] * 100 = -30.0% LIFO loss.

* note that the sell number is always divided by the buy number.

-------------------------
Gain with different purchase prices:
Buy 50 shares at $7 = 50 * 7 = 350
Buy 70 shares at $8 = 70 * 8 = 560
Sell 120 shares at $10 = 120 * 10 = 1200
[ ( 1200 / {350 + 560} ) -1] = 31.9% LIFO gain


Best Regards,
Don Carlson

I really appreciate the formula for figuring LIFO gains on combined sells.

Thxs Don

Keith
PS - Just wanted to make sure that if we report LIFO gains or losses that we all use the same pencil. <g>
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