How the Ending Inventory Calculator works
This tool answers a core accounting question: how much inventory, valued at cost, is still on hand at the end of a reporting period? It uses the standard periodic-inventory formula, which infers the ending balance from the beginning balance, what was purchased, and what was sold — without requiring a physical recount.
The formula
The periodic-inventory identity is:
Ending Inventory = Beginning Inventory + Net Purchases − Cost of Goods Sold (COGS)
where Net Purchases = Purchases − Purchase Returns & Allowances. Beginning inventory plus net purchases together equal Goods Available for Sale — everything the business could have sold during the period. Subtracting COGS (the cost of what actually sold) leaves whatever cost remains in inventory.
Worked example
Suppose a business starts the period with $45,000 of inventory at cost. It purchases $82,000 of additional stock and returns $2,500 of defective goods to suppliers, for net purchases of $79,500. Goods available for sale is $45,000 + $79,500 = $124,500. If the cost of goods sold for the period was $96,000, ending inventory is $124,500 − $96,000 = $28,500, or about 22.9% of goods available for sale.
Reading the result
- Positive and plausible: a result in a normal range for the business's turnover pace is consistent with the books.
- Zero or near-zero: nearly everything available was sold during the period — check whether that matches known stock levels.
- Negative: COGS exceeds goods available for sale, which is not physically possible. It usually points to an unrecorded purchase, a COGS figure that includes costs beyond the period, or a data entry error, and should be investigated before the figure is used.
Periodic method versus a physical count
This formula is the periodic (or "book") method: it derives ending inventory algebraically from other ledger figures. It does not detect shrinkage, theft, spoilage, or counting errors that a physical inventory count would catch. Businesses typically use this formula for interim reporting and reconcile it against a physical count at year-end (or more often under a perpetual system) to true up the balance.
Why it matters for the income statement
Ending inventory and COGS are two sides of the same identity: Goods Available for Sale = COGS + Ending Inventory. Overstating ending inventory understates COGS for the period, which overstates gross profit and net income — so an accurate inventory figure is not just a balance-sheet number, it directly shapes reported profitability. This calculator performs the arithmetic only; it does not replace a company's chosen costing method (FIFO, LIFO, or weighted average) for valuing individual units.