Inventory Valuation Methods and Financial Performance of Cooperative Societies in Ogun State, Nigeria

Abstract

This paper has studied how inventory valuation techniques impact on financial performance of cooperative societies in Ogun State, Nigeria. Inventory valuation is a significant accounting practice, which dictates the cost of goods sold, the reported profit and the financial position of organisations in general. The research narrowly examined how the First-In, First-Out (FIFO), Last-In, First-Out (LIFO) and Weighted Average Cost (WAC) techniques affect cooperative financial performance and the overall impact of the techniques. The research design was a quantitative one. It was comprised of 356 registered production and marketing cooperative societies in Ogun State. It was calculated that a sample of 186 respondents will be used as a sample by using the Yamane (1967) sample size formula, and as a result, 147 valid responses were used to analyze the sample. The questionnaire was used to gather data on cooperative officers and accounting officers who dealt with inventory and financial management. The instrument was tested on the reliability coefficient of Cronbach which was 0.945. The data were analysed using SPSS version 26 using descriptive statistics, Pearson correlation and regression analysis. Results showed that FIFO, LIFO, and Weighted Average Costs method is positively and statistically significant to the financial performance of cooperative societies. The joint analysis also suggests that inventory valuation procedures have a huge impact on financial performance. The paper concludes that proper inventory valuation procedures enhance financial reporting and organisational performance in societies that are cooperative.