Generally Accepted Accounting Principles (GAAP) Inventory Valuation Methods aim to accurately and consistently measure the value that a company’s inventory holds. Companies use three main methods to calculate their inventory values: First In, First Out (FIFO), Last In, First Out (LIFO), and Weighted Average Cost. These methods allow businesses to match the cost of the items they have on hand with the revenue generated by the sale of those products. By implementing these GAAP Inventory Valuation Methods, companies are able to better understand their overall financial performance and make informed decisions about how to manage their inventories.