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|2||Ending inventory Formula|
|3||How to calculate ending inventory|
|4||How to use our calculator|
This ending inventory calculator allows you to calculate the total worth of units in your inventory at the conclusion of an accounting epoch.
You will be able to quickly and effortlessly figure out how to determine the ending inventory value that goes into your balance sheet. You will also be able to estimate your inventory turnover to decipher how efficiently you are selling your product.
Fundamentally, ending inventory can be measured by adding new purchases to starting inventory then subtracting the prices of products sold.
This makes ending inventory the value of goods available for sale at the end of an accounting epoch. Although the number of units in ending inventory won’t be affected at the conclusion of an accounting phase, its dollar value is affected by the inventory valuation method selected by the management.
In the periods of rising costs or inflationary constraints FIFO LIFO systems are being widely used, FIFO (first in, first out) produces a higher ending inventory valuation than LIFO (last in, first out). As such, certain businesses strategically select LIFO or FIFO approaches based on diverse business environments.
Ending inventory Formula
The average inventory formula goes like this:
Ending Inventory = (beginning Inventory + net purchases)-(prices of products sold)
Starting inventory is the monetary worth of the inventory at the start of the accounting epoch.
Net purchases are the worth of new items in the inventory that were bought during the accounting phase:
Prices of product sold, is the direct cost of goods manufacturing, that you sell out of the constituents from the inventory.
You can conveniently measure the ending inventory with these costs of goods sold formula.
How to calculate ending inventory
You can know how to find ending inventory with the formula that we have discussed above.
Begin with measuring your starting inventory. Say that at the start of the month, you had $30,000 worth of materials in stock.
- Estimate the net worth of purchases made during the month. Consider that it was $35,000.
- Determine the cost of manufacturing the goods you sold over this particular month. We can say it was $45,000.
- You can now input these values to the formula:
Ending Inventory = (beginning inventory + net purchases) - (prices of products sold)
Ending Inventory = ($30,000 + $35,000) - ($45,000)
Add together the beginning inventory and net purchases and subtract the prices of products sold from their sum and you get the value for the ending inventory as shown below:
Ending Inventory = $65,000 - $45,000
Ending Inventory = $20,000
How to use our calculator
If math isn’t your strongest suit, you can just use our intuitive calculator to measure the ending inventory. Just follow the steps below:
- Enter the values of beginning inventory, net purchases and costs of goods sold.
- Press ‘calculate’
That’s all. Our calculator will measure the ending inventory for you and as a token of good-will, it will also calculate the inventory turnover for you.
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Good calculator. It’s the best tool that I use on the internet for calculating the ending inventory.