Business Case Studies, Finance, Accounting and Control Case Study, Berkshire Hathaway Inc,Warren Buffet's Investment Philosophy

Code : FAC0069

Year : 2026

Industry : -

Region : Asia

Teaching Note:Available

Structured Assignment : Not Available

Abstract: Inventory valuation plays a key role in determining a firm’s cost of goods sold, profitability, and financial position. This case study examines the impact of two widely used inventory valuation methods—First-In, First-Out (FIFO) and Weighted Average Cost (WAC)—on financial reporting and decision-making. Using a hypothetical business scenario with multiple inventory purchases at varying prices, the case analyses how each method influences inventory valuation, cost of goods sold, and net profit. The study highlights the differences in financial outcomes under fluctuating price conditions and evaluates the suitability of each method in terms of income measurement, inventory management, and compliance with accounting standards. The findings demonstrate that FIFO generally results in higher closing inventory values and profits during periods of rising prices, while WAC provides a more stable and averaged cost representation. This case underscores the importance of selecting an appropriate inventory valuation method to ensure accurate financial reporting and informed managerial decisions.

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