Ending Inventory Calculator
Calculate ending inventory value using the basic inventory equation: Beginning Inventory + Purchases − Cost of Goods Sold (COGS).
How to use this tool
- Enter beginning inventory, purchases during period and cost of goods sold (cogs) in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your ending inventory and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Ending Inventory = Beginning Inventory + Purchases − COGS
Equivalently: Goods Available for Sale = Beginning Inventory + Purchases and Ending Inventory = Goods Available for Sale − COGS.
How it works
The ending inventory equation is a fundamental accounting identity used in all inventory costing methods (FIFO, LIFO, and Weighted Average). It starts with the opening inventory balance, adds all inventory purchased or produced during the period to arrive at goods available for sale, then subtracts the cost of goods that were actually sold. The remainder is the ending inventory, which appears as a current asset on the balance sheet and feeds into the next period's beginning inventory. The inventory turnover ratio (COGS ÷ average inventory) indicates how efficiently inventory is being managed.
Worked example
Retail Store Quarterly Inventory
- Beginning inventory = $1,000; Purchases during quarter = $5,000; COGS = $4,000
- Goods available for sale = $1,000 + $5,000 = $6,000
- Ending inventory = $6,000 − $4,000 = $2,000
Ending Inventory = $2,000. Average inventory = ($1,000 + $2,000) / 2 = $1,500; Inventory Turnover = $4,000 / $1,500 ≈ 2.67.
Common mistakes to avoid
- Confusing purchases with cost of goods available for sale — purchases is only the new inventory added, not the total available; Beginning Inventory + Purchases equals goods available.
- Using sales revenue instead of cost of goods sold (COGS) in the formula — revenue includes markup, so substituting revenue produces a nonsensically low ending inventory value.
- Failing to reconcile ending inventory to the physical count, which misses shrinkage, theft, or obsolescence that the accounting formula alone cannot detect.
Key terms
- What is ending inventory?
- Ending inventory is the value of goods a company still has on hand at the end of an accounting period. It is reported as a current asset on the balance sheet and directly affects COGS and gross profit.
- What is COGS?
- Cost of Goods Sold (COGS) is the direct cost of producing or purchasing the inventory items that were sold during a period. It includes materials, labor, and manufacturing overhead attributable to sold goods.
- What is the difference between FIFO and LIFO?
- FIFO (First-In, First-Out) assumes older inventory is sold first, resulting in lower COGS and higher ending inventory when prices rise. LIFO (Last-In, First-Out) assumes newest inventory is sold first, resulting in higher COGS and lower ending inventory in rising price environments. LIFO is not permitted under IFRS.
- Why does ending inventory matter?
- Ending inventory affects both the balance sheet (as a current asset) and the income statement (as it determines COGS and therefore gross profit). Errors in inventory valuation can materially misstate a company's financial position.
Frequently asked questions
- What is the basic inventory equation?
- Ending Inventory = Beginning Inventory + Purchases - COGS. It shows that goods not yet sold at cost remain as ending inventory.
- Why might ending inventory per the formula differ from a physical count?
- Shrinkage (theft, damage, spoilage) and recording errors cause discrepancies. The physical count is authoritative; the difference is recognized as a loss.
- Does the costing method (FIFO vs LIFO) affect this formula?
- No, the formula itself is the same. However, COGS differs under FIFO vs LIFO in a period of changing prices, which in turn changes the ending inventory value.