In short, ending inventory equals goods on hand at a company’s balance sheet date. To calculate ending inventory, you need to know what it is. Why is calculating ending inventory essential? COGSĬOGS equals the total cost of purchasing or manufacturing goods ready to be sold for a given accounting period.įormula to calculate COGS = Opening Inventory + Purchases – Closing Inventory. Your beginning inventory is your last period’s ending inventory for the financial year.īeginning Inventory = COGS + Ending Inventory – Net Purchases. Using this information and some basic math skills, you can quickly figure out your ending inventory amount. You’ll need to know your sales volume, per-unit costs, and calculation method. Whether you’re calculating it by hand or using software like QuickBooks or Excel, there are several metrics you’ll need before you can figure out your total ending inventory. It may sound simple, but understanding ending inventory can be difficult. Ending inventory is simply what’s leftover after all products have been sold and paid for. If a business carries inventory, it will need to determine its ending inventory. In this blog, we’ll explain ending inventory calculation If you’re responsible for managing your own inventory, it’s essential to know how to calculate ending inventory and why it’s used in financial reports. It’s the difference between your COGS and your beginning inventory. Ending inventory refers to the value of your goods at the end of your accounting period.
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