LIFO to FIFO financial statements conversion for major international bank

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Prescio assisted a major international bank in the development of a transformation that converted Last-in-First-Out (LIFO) or Spec-ID financial statements to First-in-First-Out (FIFO) financial statements.

Some enterprises such as wineries use LIFO based financial statements to reduce federal and state taxes and increase the cash flow of the enterprise. However the quarterly and interims are in FIFO or Spec-ID basis. This requires outsiders to transform the annuals, the interims and the quarterly to the same format for comparison purposes. Also this transformation allows easier comparison with other enterprises who report in FIFO format. The intent of this exercise was to develop an application that would take the LIFO based financial statements of some wineries and transform them into FIFO based statements and allow for additional analysis of the reports.

The objective here was to develop an Excel based application that would take several annual LIFO statements generated by Moody’s Financial Analyst (MFA) and convert them into FIFO statements. The application needed to provide Credit Recommendation (CR), Problem Loan Reporting (PLR), and Primary Source Break Even (PSBE) analysis capability to the users. The project required financial statement analysis, report generation, analytics, and coding in VBA. The end product was delivered to client specification well in advance of the delivery date. The end product is now being used by several Credit Administrators within the bank. An enhancement to the original product has since been requested.