The gross profit method is used for interim reports or to estimate inventory lost in a fire or theft. A physical count is still needed for year-end financial statements.
How to use the Ending Inventory Calculator
- I know
- Beginning inventory
- Net purchases
- Cost of goods sold
- Net sales
- Gross margin
Results update as you type, and every field accepts the units shown in its menu.
How it works
Choose whether you know COGS or want to estimate it from sales and margin, then enter the figures.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| I know | Choose one: Cost of goods sold, Sales and gross margin |
| Beginning inventory | Amount in your currency |
| Net purchases | Amount in your currency |
| Cost of goods sold | Amount in your currency |
| Net sales | Amount in your currency |
| Gross margin | In % |
What each result means
- Ending inventory = [Beginning inventory] + [Net purchases] – [Cost of goods sold used]
- Cost of goods available for sale = [Beginning inventory] + [Net purchases]
- Inventory turnover = [Cost of goods sold used]÷(([Beginning inventory] + [Ending inventory])÷2)
Example values
How the main result changes when Beginning inventory changes and everything else stays at the example values above:
| Beginning inventory | Ending inventory |
|---|---|
| 40,000 | 50,000 |
| 60,000 | 70,000 |
| 80,000 | 90,000 |
| 100,000 | 110,000 |
| 120,000 | 130,000 |
| 160,000 | 170,000 |
Formula
Ending inventory = beginning inventory + net purchases − COGSGross profit method: COGS = sales × (1 − gross margin)Worked example
Inputs — I know: Cost of goods sold; Beginning inventory: $80,000; Net purchases: $300,000; Cost of goods sold: $290,000; Net sales: $450,000; Gross margin: 35 %.
Results — Cost of goods sold used = $290,000.00; Ending inventory = $90,000.00; Cost of goods available for sale = $380,000.00; Inventory turnover = 3.41.
Frequently asked questions
How do I calculate ending inventory?
Beginning inventory + purchases − cost of goods sold.
What is the gross profit method?
Estimating COGS (and ending inventory) from sales and the usual gross margin.
Does the inventory method matter?
FIFO, LIFO and weighted average give different ending inventory values.
What formula does the Ending Inventory Calculator use?
Ending inventory = beginning inventory + net purchases − COGS.