[7] also indicates that the inventory accounting choice is based on the assumption that company makes its
strategic inventory accounting choice according to the characteristics of its financing, operation and accounting
systems. [7] presents three variables which are related to the LIFO choice. Total sales or holding gains are used
to measure the size of the company. Fixed asset/total asset ratio is used to reflect the capital intensiveness. Covariance
of inventory variation describes end inventory fluctuation. The results prove that companies which
adopt LIFO tend to be larger, with more stable end inventory and stronger capital intensiveness.