Frequently Asked Questions Channels/Information What is the FIFO cost calculation system?
Frequently Asked Questions Securities What is the FIFO cost calculation system?
FAQ What is the FIFO cost calculation system?
- Question
- What is the FIFO cost calculation system?
- Answer
- IFO stands for First In - First Out (FIFO). This system works by placing bets on multiple shares at different prices and quantities. When a sale occurs, the system will sell the shares purchased first. This may cause the displayed cost for a customer to change at times, for example:
Day 1: Purchased 10,000 shares of XXYY at 5 baht (Lot 1)
Day 2: Purchased 10,000 shares of XXYY at 4.50 baht (Lot 2)
Day 3: Purchased 10,000 shares of XXYY at 4 baht (Lot 3)
Day 4: Purchased 10,000 shares of XXYY at 3.50 baht (Lot 4)
The average price of 40,000 shares of XXYY is 4.25 baht (average price of Lots 1, 2, 3, and 4)
Day 5: Sold 10,000 shares of XXYY (the system will sell Lot 1 first). The average price displayed on the next business day will show a remaining balance of 30,000 shares at 4 baht (average price of Lots 2, 3, and 4) by the system. FIFO (First-In, First-Out) calculation is used.
On the 6th, 5,000 shares of XXYY were sold (the system will partially sell Lot 2 (5,000 shares)). The average price displayed on the next business day will show a remaining balance of 25,000 shares at 3.90 baht (average price of the remaining Lot 2 (5,000 shares), Lots 3 and 4). The FIFO system uses the First-In, First-Out (FIFO) calculation.
On the 7th, 15,000 shares of XXYY were sold (the system will sell the remaining Lot 2 (5,000 shares) and Lot 3 (10,000 shares)). The average price displayed on the next business day will show a remaining balance of 10,000 shares at 3.50 baht (Lot 4, as the previous lots have been fully sold). The FIFO system uses the First-In, First-Out (FIFO) calculation.
Therefore, it is recommended that customers manually record their securities purchase and sale transactions to prevent confusion. Or, a misunderstanding may arise from the FIFO (First-In, First-Out) display format.
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