Influence of Selected Manufacturing Firm Characteristics on Choice of Inventory Costing Method


  • Supanya Suvannasing Asia-Pacific International University
  • Paluku Kazimoto Asia-Pacific International University


Inventory Costing Methods, First-In-First-Out, Weighted Average Cost Method


The study aims to examine the influence of selected characteristics of manufacturing firms on the choice of Inventory Costing Method. The food and beverage and the steel sectors listed in the Thailand Stock Exchange from 2016 to 2018 were studied, consisting of 36 firms and 24 firms respectively. These firms adopted inventory costing methods such as First-In-First-Out, Weighted Average Cost Method, and Moving Average Cost Method, and characteristics such as firm size, inventory size, profitability, firm financial leverage, inventory turnover and current ratios were examined.  A logistic regression test was used to find the influence that firm characteristics have on inventory costing methods. The results indicate that in 2017 and 2018, a significant relationship was found between profitability, inventory turnover, and current ratio the inventory costing method used by food and beverage firms, while no statistically significant factors were found in steel sector firms.


Aiello, J. (2007). Rightsizing inventory [Google Books version].

Asgari, M., Mehdizadeh, S., & Hassani, M. (2014). Explain the relationship between the selected inventory quality assessment profitability of the companies listed in Tehran Stock Exchange. World Essay Journal, 1(2), 55-58.

Bank of Thailand. (2016). Thailand’s economic conditions in 2016.

Banternghansa, C., Paweenawat, A., & Samphantharak, K. (2019). Understanding corporate Thailand I: Finance (Discussion Paper No. 112).

Bragg, S. (2005). Inventory accounting: A comprehensive guide [Google Books version].

Bragg, S. (2005). The ultimate accountants’ reference including GAAP, IRS & SEC regulations, leases, and more [Google Books version].

Bragg, S. (2012). Business ratios and formulas: A comprehensive guide (3nd ed.) [Google Books version].

Chang, C. (2010). Service systems and management engineering: Creating strategic differentiation and operational excellence [Google Books version].

Department of Industrial Promotion. (2016). Inventory management by FIFO.

Dopson, L. R., & Hayes, D. K. (2015). Food and beverage cost control. John Wiley & Sons.

Engle, C. (2010). Aquaculture economics and financing: Management and analysis [Google Books version].

Epstein, B., Nach, R., & Bragg, S. (2009). Wiley GAAP 2010: Interpretation and application of generally accepted accounting principles [Google Books version].

Epstein, L. (2012). The business owner’s guide to reading and understanding financial statements: How to budget, forecast, and monitor cash flow for better decision making [Google Books version].

Garrison, R., Noreen, E., & Brewer, P. (2009). Managerial Accounting (11th ed) [Google Books version].

Garrison, M. E., Chou, T. M., & Hyde, G. M. (2019). U.S. Patent No. 10,226,563. Washington, DC: U.S. Patent and Trademark Office.

Gildersleeve, R. (1999). Winning business: How to use financial analysis and benchmarks to outscore your competition [Google Books version].

Gopalakrishnan, V. (1994). Accounting choice decisions and unlevered firms: Further evidence on debt/equity hypothesis. Journal of Financial and Strategic Decision, 7(3), 33-47.

Gregory, D., & Bader, K. (2018). Logistic and linear regression assumptions: Violation recognition and control. Proceedings of Midwest SAS User Group 2018 conference, Indiana, AA-091, 1-22.

Gu, S. (2013). Research and analysis on issued inventory valuation methods of enterprise. Proceedings of International Academic Workshop on Social Science (IAW-SC 2013), China, 50, 541-544.

Hapsari, L. (2016). The influence of company size, financial leverage, liquidity ratio, and income before tax towards the selection of inventory cost flow assumptions in retail companies listed in IDX period 2012-2014 (Unpublished Bachelor’s thesis). President University. Indonesia.

Ibarra, V. (2018). Choice of inventory costing method of selected companies in the Philippines. Journal of International Business Research, 7(1), 17-30.

Jagels, M., & Ralston, C. (2006). Hospitality management accounting (9th ed.) [Google Books version].

Jitpleecheep, P., & Arunmas P. (2019). Sugary drink tax pushed innovation. Bangkok Post.

Kimmel, P., Weygandt, J., & Kieoso, D. (2010). Accounting: Tools for business decision makers (4th ed.) [Google Books version].

Local sugar industry outlook neutral. (2019). Bangkok Post.

Ministry of Industry (2018). Industrial economic report 2018 and trend for 2019.

Ministry of Industry (2018). Industrial Economic Report Quarter 4/2018 and Trends in the 1st Quarter of 2019.

Mottershead, A., Kelt J., & Grant, A. (2012). OCR AS business studies student unit guide new edition: Unit F291 an introduction to business [Google Books version].

Narsale, O. (2016). University of Mumbai project report on ratio analysis (PowerPoint slides).

Needles, B., Powers, M., & Crosson, S. (2010). Financial and managerial accounting (9th ed.) [Google Books version].

Newsom, J.T. (2016), Sample Size and Estimation Problems with Logistic Regression (Class handout). Retrieved from Portland State University PSY 510/610 Categorical Data Analysis.

Nikolai, L., Bazley J., Jones, J. (2009). Intermediate accounting (11th ed.) [Google Books version].

Porter, G. & Norton, C. (2016). Financial accounting: The impact on decision makers (10th ed.) [Google Books version].

Prasad, M., & Sinha, K. (1990). Principles of management accounting (Google Books version).

Pratt, J. (2010). Financial accounting in an economic context (8th ed.) [Google Books version].

Rachlin, R. (1997). Return on investment manual: Tools and applications for managing financial results [Google Books version].

Robinson, T., Henry, E., Pirie, W., & Broihahn, M. (2012). International financial statement analysis [Google Books version].

Robinson, T., Henry, E., Pirie, W., & Broihahn, M. (2015). International financial statement analysis [Google Books version].

Saunders, A., & Walter, I. (1994). Universal banking in the United States: What could we gain? What could we lose? (Google Books version).

Simeon, E., & John, O. (2018). Implication of choice of inventory valuation methods on profit, tax and closing inventory. Account and financial Management Journal, 3(7), 1639-1645.

Stickney, C., Weil, R., Schipper, K., & Francis, J. (2009). Financial accounting: An introduction to concepts, methods and uses [Google Books version].

Troy, L. (2008). Almanac of business and industrial financial ratios [Google Books version].

Tulsian, P., & Tulsian, B. (2016). Financial management with Quick Revision (For CA-IPC, ground-1) (7th ed.) [Google Books version].

Ugon, A., Karlsson, D., & Klein, G.O. (2018). Building continents of knowledge in oceans of data: The future of co-created eHealth [Google Books version].

Van Frederikslust, R. (2012). Predictability of corporate failure: Models for prediction of corporate failure and for evaluation of debt capacity [Google Books version].

Vinturella, J., & Erickson, S. (2013). Raising entrepreneurial capital (2nd ed.) [Google Books version].

Wahlen, J., Baginski, S., & Bradshaw, M. (2011). Financial reporting, financial statement analysis, and valuation: A strategic perspective: A strategic perspective (7th ed.) [Google Books version].

Warren, C., Reeve, J., & Duchac, J. (2016). Financial and managerial accounting (14th ed.) [Google Books version].

Wisner, J., Tan, K. & Leong, G. (2018). Principles of supply chain management: A Balanced Approach [Google Books version].

Zinkevičienė, D., & Rudžionienė, K. (2005). Impact of company's leverage on financial accounting method choice. Inžinerinė ekonomika, (5), 25-30.