Inventory Valuation Methods are the methods used to compute the value of inventory items on a company’s balance sheet. Accounting standards require companies to use one accepted inventory valuation method to ensure consistency and accuracy in financial reporting. There are several different methods that a company can choose from, including FIFO (First in First Out), LIFO (Last In First Out), Average Cost, and Specific Identification. Each approach can offer unique benefits based on the makeup of the company’s inventory, but all should result in reliable valuations that reflect true market values. Proper inventory valuation is essential in determining a company’s profitability and staying compliant with accounting regulations.