Ending Inventory Calculator
Enter starting inventory, net purchases and cost of goods sold to see ending inventory, average inventory and inventory turnover.
Updated
Ending Inventory Calculator
Our Ending Inventory Calculator works out the value of stock a business still holds at the end of a period. Type the starting inventory, the net purchases made during the period and the cost of goods sold. It returns ending inventory along with goods available for sale, average inventory, inventory turnover and the share of goods sold. It suits retailers, wholesalers and manufacturers closing their books, bookkeepers, and students learning inventory accounting.
Quick answer
Ending inventory is starting inventory + net purchases − cost of goods sold: 200,000 + 120,000 − 250,000 = 70,000.
- Goods available: starting inventory + net purchases, here 320,000.
- Average inventory: (starting + ending) ÷ 2, here 135,000.
- Inventory turnover: COGS ÷ average inventory, here about 1.85.
- Same period: all three inputs must cover the same month, quarter or year.
What Is Ending Inventory?
Ending inventory, also called closing inventory, is the value of goods a business still has for sale at the end of an accounting period. For a retailer it is finished goods on the shelves and in the stockroom. For a manufacturer it also includes raw materials and work in progress.
It appears on the balance sheet as a current asset and carries forward as the starting inventory of the next period. It also sets cost of goods sold, so any error in it flows straight through to gross profit, net income and tax.
Ending Inventory Formula
= starting inventory
+ net purchases
− cost of goods sold
The first two terms together are the goods available for sale. Every unit available is either sold (cost of goods sold) or still on hand (ending inventory):
= COGS + ending inventory
- Starting inventory: the ending inventory of the previous period.
- Net purchases: purchases minus returns, allowances and discounts. Freight-in is usually added.
- Cost of goods sold: the cost of the stock that was sold in the period, valued at cost, not selling price.
How to Calculate Ending Inventory
A shop starts the year with inventory of 200,000, makes net purchases of 120,000 and sells goods that cost 250,000:
320,000 − 250,000 = 70,000
- Find goods available for sale. 200,000 + 120,000 = 320,000.
- Subtract cost of goods sold. 320,000 − 250,000 = 70,000.
- Check the share sold if needed. 250,000 ÷ 320,000 = 78.125%, so about 21.9% is left.
Ending inventory is 70,000, and it becomes the starting inventory for next year.
Where the Goods Go
The bars are drawn to scale. Both are 320,000 tall because every unit available for sale ends up in one of two places: sold, or still in stock.
Inventory Turnover and Average Inventory
The calculator also shows how often stock was sold and replaced in the period:
= (start + ending) ÷ 2
Turnover
= COGS ÷ average inventory
In the shop example, average inventory is (200,000 + 70,000) ÷ 2 = 135,000 and turnover is 250,000 ÷ 135,000 ≈ 1.85. Over a year, that means stock sat for about 365 ÷ 1.85 ≈ 197 days before being sold. A higher turnover usually means leaner stock and faster sales; a lower one can point to overstocking or slow lines. For turnover on its own, use the Inventory Turnover Calculator.
Ending Inventory Examples
A clothing store (one year). Starting inventory of 240,000, net purchases of 13,000 and cost of goods sold of 220,000:
= 33,000
Average inventory is 136,500 and turnover is about 1.61, roughly 226 days of stock. For clothing, that suggests slow-moving lines and a case for smaller orders or more promotion.
An online home decor shop (one quarter). Starting inventory of 18,000, net purchases of 7,500 and cost of goods sold of 19,200:
= 6,300
Average inventory is 12,150 and turnover is about 1.58 for the quarter. With only 6,300 left, the owner can see which popular items need restocking.
A furniture maker (one month). Starting inventory of 95,000, net purchases of 42,000 and cost of goods sold of 110,000:
= 27,000
Average inventory is 61,000 and turnover is about 1.80 for the month. The 27,000 left includes raw timber and finished pieces, which management can compare with next month's orders.
FIFO, LIFO and Weighted Average
The formula needs every figure at cost, and the cost method decides which purchase prices end up in COGS and which stay in ending inventory:
| Method | Ending inventory holds |
|---|---|
| FIFO | The latest purchase costs, because the oldest units are sold first. |
| LIFO | The oldest costs. Not allowed under IFRS. |
| Weighted average | An average cost of all units available. |
When prices are rising, FIFO gives the highest ending inventory and the lowest COGS, and LIFO the opposite. Use the same method for every figure you type, and keep it from one period to the next.
Counting Stock and Inventory Errors
Under a periodic system, a business counts its stock at the end of the period and works the formula the other way to find COGS:
+ net purchases
− ending inventory
That is why a counting error matters. In the shop example, if the count wrongly showed 80,000 instead of 70,000, COGS would come out at 320,000 − 80,000 = 240,000. Gross profit would be overstated by 10,000 this year, and because the 80,000 becomes next year's starting inventory, next year's profit would be understated by the same amount. To work out COGS from a count, use the Cost of Goods Sold Calculator.
What the Result Leaves Out
- Shrinkage. Theft, damage and spoilage are not in the formula. A physical count shows the real figure.
- Write-downs. Stock worth less than its cost should be written down, which lowers ending inventory.
- Mismatched periods. Purchases or COGS from another period give a wrong result.
- Turnover as a guide. A good turnover differs widely between a grocer and a furniture maker, so compare with similar businesses.
The result is for education and planning and is not accounting or tax advice.
Key Terms
- Ending inventory
- Stock still on hand at the end of the period.
- Starting inventory
- Stock on hand at the start of the period.
- Net purchases
- Purchases minus returns and discounts.
- COGS
- The cost of the stock sold in the period.
- Goods available
- Starting inventory plus net purchases.
- Average inventory
- (Starting + ending inventory) ÷ 2.
- Turnover
- COGS ÷ average inventory.
How to Use the Ending Inventory Calculator
- Enter starting inventory. Type the inventory value at the start of the period, such as 200,000. It is last period's ending inventory.
- Enter net purchases. Type purchases for the same period minus returns, allowances and discounts, such as 120,000.
- Enter cost of goods sold. Type the cost of the stock sold in the period, such as 250,000. It cannot be more than starting inventory plus purchases.
- Read and copy the result. Ending inventory appears as you type, with the working, goods available, average inventory, inventory turnover and a bar showing sold against left. Press Copy to copy it, or Clear or Esc to start again.
Example: starting inventory of 95,000 with net purchases of 42,000 and cost of goods sold of 110,000 gives ending inventory of 27,000.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate ending inventory?
Add net purchases to starting inventory to get goods available for sale, then subtract the cost of goods sold. What is left is ending inventory.
What is the ending inventory formula?
Ending inventory = starting inventory + net purchases − cost of goods sold.
What is the ending inventory if starting inventory is 200,000, net purchases are 120,000 and COGS is 250,000?
It is 70,000, because 200,000 + 120,000 − 250,000 = 70,000. Average inventory is 135,000 and inventory turnover is about 1.85.
What should be included in net purchases?
All inventory bought in the period minus purchase returns, allowances and discounts. Freight-in, the cost of shipping stock to you, is usually added as part of inventory cost.
Can COGS be more than starting inventory plus purchases?
No. A business cannot sell more than it had available, so the calculator shows an error. Check for missing purchases or figures from different periods.
How is inventory turnover calculated?
Inventory turnover = COGS ÷ average inventory, where average inventory = (starting inventory + ending inventory) ÷ 2. A higher figure means stock is sold and replaced more often.
Does the calculator work for monthly, quarterly or yearly periods?
Yes. It works for any period as long as starting inventory, net purchases and COGS all belong to the same period.
Does it work for manufacturers?
Yes. Retailers usually enter finished goods only, while manufacturers include raw materials, work in progress and finished goods in their inventory figures.
Is the Ending Inventory Calculator free?
Yes. It is free to use, with no sign-up and no limit on how many times you use it.
Sources
- OpenStax. Principles of Accounting, Volume 1, 10.1 Basic Inventory Valuation Methods.
- OpenStax. Principles of Accounting, Volume 1, 10.4 Impact of Inventory Valuation Errors.
- AccountingCoach. Inventory and Cost of Goods Sold.
- Corporate Finance Institute. Inventory Turnover.
- Shopify. Ending Inventory Formula: How To Calculate It.
- WallStreetMojo. Ending Inventory Formula.
- Wikipedia. Ending inventory.
- Wikipedia. Inventory turnover.
- Wikipedia. FIFO and LIFO accounting.
Try our Ending Inventory Calculator to find stock on hand and inventory turnover in a couple of seconds.