"First In, First Out" or "FIFO" is an accounting method for inventory based on the premise that the oldest inventory will be the next inventory to be sold or shipped. While predominantly a method of calculating the value of inventory, it can be extended to any of a company's assets, using the same underlying assumption that the oldest assets will be the first ones to be used, sold, or disposed of. FIFO stands in contrast to LIFO--Last in, First Out--a valuation method based on the premise that the newest inventory or assets will be the first ones sold or disposed of. Companies use FIFO for a variety of reasons: for some it reflects the reality of their business, while others use it to maximize the recorded value of inventory or, under different circumstances, to minimize the taxable value of assets or inventory.