2015 - 2x revenue, 8x ebitda. 2016 - 2x revenue, 10x ebitda. Fifo to lifo switch, what happens?
Don't completely grasp the concept of LIFO/FIFO in this situation. Is the answer just that the EBITDA numbers would switch, so 2015 has 10x EBITDA and 2016 8x?
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Your question is worded confusingly. When is the FIFO/LIFO switch completed? Moving forward? Between 2015 and 2016?
Moving to LIFO in an inflationary environment is used as a tax strategy for firms, as it lowers near term EBITDA and taxes paid to the government. This would make a company more valuable (compared to an identical company using FIFO in an inflationary environment). Everything else equal, this would drive up the EBITDA multiple: LIFO increases firm value in this instance.
I am not sure if this helps, or if I'm missing what the question is getting at, but hopefully that is somewhat useful.
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