pacmandefense

right, you have already got it correct to this point.

Further, though COGS is only an accounting thing in your Income Statement, but since it is an expense, more or less of it will determine your taxable income and hence your taxes. And, your taxes are a REAL cashflow.

So, if your COGS is higher under LIFO, your taxable income becomes lower and hence taxes (real cashflow going out) are lower. So your cash in hand is higher.