Calculate Ending Inventory
Ending inventory measures the value of goods, inputs or materials available to either use or sell at the end of an inventory accounting period. A business uses ending inventory to forecast sales, analyze pricing schemes and determine whether it needs to buy more goods or fewer goods based on current usage.
Instructions
Determining Ending Inventory
1. Ending inventory can be determined by plugging the appropriate values into the following formula:
Beginning inventory + net purchases - cost of goods sold (CoGS) = ending inventory
This formula can be rearranged to calculate cost of goods sold, net purchases or beginning inventory.
2. Beginning inventory is the inventory available at the start of the fiscal year.
3. Purchases are the new inventory purchases made within the year.
4. The cost of goods sold is the total value of inventory (the cost) sold by the company during the period. This amount includes the direct cost of the materials used in production as well as the direct labor costs used to produce the good. Not included are distribution costs and sales force costs.
Tags: cost goods, cost goods sold, goods sold, Beginning inventory, Calculate Ending, Calculate Ending Inventory, Ending Inventory
