With its cash burn accelerating MillerKnoll (MLKN), an interior furnishings maker, changed the way it accounts for inventory from the LIFO to FIFO method within its Americas segment. Changing to FIFO— especially during a period of rising costs— can increase a company’s profitability since older inventory acquired at a lower cost is used to value cost-of-goods-sold (COGS) on the income statement.

Results from the prior year period were recast and show a modest impact— the change added nearly 2% to MillerKnoll’s America’s segment operating income and reduced total company operating loss by approximately 0.37%.

With cost increases accelerating since then, the switch to FIFO likely had a larger impact on MilerKnoll’s latest quarter. The company did not quantify the impact— and a recent change in reporting makes segments uncomparable— but we estimate the switch to FIFO added approximately $1 million to the Americas segment operating income, or 4.5%.

The change comes as MillerKnoll acknowledged building inventory just as demand eroded.

Notably, we identified a discrepancy between the company’s earnings release and the 10-Q filed two weeks later. The release says the switch to FIFO was made May 30, 2021 but the quarterly filing says it was made in the fourth quarter of FY22 which ended May 28, 2022.

Separately, to improve cash flow MillerKnoll announced a number of cost cutting initiatives on the earnings call. One item not mentioned— but included in the footnotes of the quarterly filing— is the $13.5 million advance the company took against the cash surrender value of life insurance policies it owns.

Though we’re skeptical, it’s possible the advance was received on better terms than MillerKnoll might have gotten in the debt markets— the firm’s revolver and term loans carry variable and floating interest rates. The company did not disclose the terms, or penalty, for borrowing against the policies.

The loan increased MillerKnoll’s cash position by 6.6%.

The company generated negative free cash flow (Op CF less CapEx) in the quarter of $82.1 million. Total cash and liquidity in the quarter decreased by 6.2% and 23.6% respectively.