🎮 Interactive Learning: Ratio Analysis & Inventory Valuation
1. Financial Ratios Calculator
Enter financial data to automatically calculate key financial ratios. See how ratio changes affect financial health in real time!
💡 Ratio Explanations
- Current Ratio: Measures a company's ability to meet short-term obligations. A ratio > 1.0 indicates that current assets are sufficient to cover current liabilities.
- Return on Assets (ROA): Measures how efficiently a company uses its assets to generate profit. A higher ratio indicates better asset efficiency.
- Profit Margin: Measures the percentage of profit in each dollar of revenue. A higher ratio indicates stronger profitability.
2. Inventory Valuation Method Comparison
Compare effects of different inventory valuation methods in inflationary environments. Adjust parameters and observe changes!
Select Economic Scenario:
📊 Inventory Valuation Method Comparison
| Valuation Method | Cost of Goods Sold (COGS) | Ending Inventory Value | Gross Profit |
|---|---|---|---|
| FIFO (FIFO) | $8,000 | $2,000 | $7,000 |
| LIFO (LIFO) | $9,600 | $400 | $5,400 |
| Weighted Average Method | $8,800 | $1,200 | $6,200 |
📚 Method Explanations
FIFO (First-In, First-Out): Assumes the first units purchased are the first ones sold. During inflation, this results in a lower cost of goods sold, a higher ending inventory value, and higher gross profit.
LIFO (Last-In, First-Out): Assumes the last units purchased are the first ones sold. During inflation, this results in a higher cost of goods sold, a lower ending inventory value, and lower gross profit.
Weighted Average Method: Uses the weighted average cost of all goods available for sale. The results will fall between those of FIFO and LIFO, regardless of price changes.