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Question:
Assume U.S. GAAP applies. In a period of rising prices and stable inventory quantities, use of LIFO will most likely result in:
A
Lower interest coverage ratios.
explanation
In a period of rising prices and stable inventory quantities, use of LIFO will result in higher solvency ratios, a higher inventory turnover ratio, and a lower interest coverage ratio (EBIT is lower under LIFO due to higher COGS).
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