Beginning inventory
$
Net purchases
$
Cost of goods sold
$
Ending inventory
$
Inventory turnover

Ending Inventory Calculator

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Ending inventory calculator allows you to calculate the value of products in stock at the end of an accounting period.

This ending inventory calculator will help you determine what is the total value of units in your inventory at the end of an accounting period. Thanks to this tool, you will be able to quickly and effortlessly figure out how to calculate the ending inventory value that goes into your balance sheet. You will also be able to calculate your inventory turnover to measure how efficiently you are selling your product. If you want to discover what is the ending inventory formula, simply keep reading!

Make sure to check out the margin calculator, too!

What is the ending inventory?

If you happen to sell any products, you will probably be left with some of the product in stock at the end of the accounting period. These products have a certain value, called the ending inventory.

The most straightforward way to calculate the ending inventory is to conduct a physical count. This, however, is not always possible; it may be far too time- and labor-consuming, or you might be too busy shipping products at the end of the month to perform an actual count. Then, the best method is the analytical one - to deduce the ending inventory from your beginning inventory, the cost of goods sold, and net monthly purchases.

Ending inventory formula

The formula for the ending inventory is as follows:

Ending Inventory = (Beginning Inventory + Net Purchases) - (Cost of goods sold)

where:

  • Beginning inventory is the monetary value of the inventory at the beginning of the accounting period;
  • Net purchases is the value of new items in the inventory that were purchased during the accounting period;
  • Cost of goods sold, or COGS, is the direct cost of production of goods that you sell out of the materials from the inventory.

Inventory turnover

You can also use this calculator to determine the inventory turnover. Essentially, this value depicts how efficient you are in selling your goods - it is the ratio of how much product you have in your inventory to the amount you actually sell. It can be calculated according to the following equation:

Inventory Turnover = Cost of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2)

Remember that there is no one optimal inventory turnover value. Even though high values are preferable, they may signal that the inventory levels are low during the month, what can cause difficulties with providing your product to customers on a short notice.

How to calculate ending inventory: an example

  1. Start with determining your beginning inventory. Let's assume that at the beginning of the month you had $25,000 worth of materials in stock.

  2. Determine the net value of purchases made over the month. Let's say it was $30,000.

  3. Find out what was the cost of producing the goods you sold during this month. We can assume it was equal to $40,000.

  4. You can now input these values to the ending inventory formula:

Ending Inventory = (Beginning Inventory + Net Purchases) - (Cost of goods sold)

Ending Inventory = ($25,000 + $30,000) - ($40,000)

Ending Inventory = ($55,000 - $40,000 = $15,000

  1. Additionally, you can find the inventory turnover of your business:

Inventory Turnover = Cost of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2)

Inventory Turnover = $40,000 / (($25,000 + $15,000) / 2) = 2.0

Your inventory turnover is equal to 2. It means that you have sold the equivalent of your average inventory twice during the accounting period.

Bogna Haponiuk

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Ending Inventory Calculator