Congratulations on your new role as a consultant for Smith & Co, a recently established company. Alex John, the company's president, has approached you for guidance on the most suitable inventory method for valuing its inventory and cost of goods sold. Mr. John has shortlisted LIFO and FIFO and seeks insight on which method to use. He understands that LIFO may be more beneficial for tax purposes, while FIFO has its advantages for financial reporting to investors and creditors. You have been informed that the company anticipates profitability in its first year and over the long term.

Prepare a report for the president describing the factors that should be considered by Smith in choosing between LIFO and FIFO.