What is 'valuation method' in SAP SRD-FIN-INV - FIN-Inventory?

valuation method - Overview

• Component: SRD-FIN-INV

• Component Name: FIN-Inventory

• Description: The source of the cost or price selected by the system to value an item in a material cost estimate based on the applicable valuation strategy.

valuation method - Details

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  Key Concepts: 
  Valuation method is a feature of the SAP SRD-FIN-INV FIN-Inventory Valuation component. It is used to determine the value of inventory items, such as raw materials, finished goods, and work in progress. The valuation method is based on the cost of the item, which can be determined by a variety of methods such as FIFO (First In First Out), LIFO (Last In First Out), or Average Cost. 
  
  How to use it: 
  The valuation method is used to calculate the value of inventory items. This value is then used to determine the cost of goods sold and the cost of goods available for sale. To use the valuation method, you must first select a method from the list of available methods. Once you have selected a method, you can enter the cost of each item and the quantity of each item in inventory. The system will then calculate the total value of all items in inventory using the selected valuation method. 
  
  Tips & Tricks: 
  When selecting a valuation method, it is important to consider how quickly inventory items are sold and how often prices change. For example, if inventory items are sold quickly and prices change frequently, then FIFO or Average Cost may be more appropriate than LIFO. Additionally, it is important to ensure that all costs associated with an item are included in