Beginning Inventory Calculator

Maintaining well-organized accounts is crucial for running a profitable business. To assess the financial health of your business, it is important to understand your income statements and balance sheets. One key aspect to consider is the value of your inventory at the beginning of an accounting period, also known as beginning inventory.

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What Is Beginning Inventory? 

Beginning inventory represents the monetary value of the goods you have available to generate revenue. Calculating your beginning inventory provides valuable insights into your inventory holdings. It enables you to identify any lost stock due to theft, breakages, damages, or poor inventory management. Additionally, it allows you to track changes in specific products or lines, enabling you to adjust orders to meet customer demand. Calculating beginning inventory is also considered a best practice for internal audit purposes and overall business accounting processes.

How To Calculate Beginning Inventory 

To calculate beginning inventory, you can follow these steps. First, use the records from the previous accounting period to determine the cost of goods sold (COGS). Then, multiply the closing inventory balance by the production cost of each item. Repeat this process using the new inventory amounts. Next, add the COGS and ending inventory. Finally, subtract the total inventory purchases from the result to obtain the beginning inventory.

While our beginning inventory calculator is available to simplify the process, it is beneficial to understand the inventory formula for manual calculations:

Beginning Inventory = Cost of Goods Sold + Ending Inventory – Purchases in the current period

In addition to determining beginning inventory, you can also utilize it to calculate your average inventory, which provides insights into your company's financial performance. To calculate average inventory, add your beginning and ending inventory and divide the sum by two. Another useful metric is inventory turnover, which measures how efficiently a company converts inventory into COGS.

 Use our Cost of Goods Sold calculator to quickly find your COGS.

How to Use the Calculator?

First, add your Cost of Goods Sold figure in its defined field, then the Ending Inventory, next enter your purchases, and finally click on Calculate. The result will be shown below the Calculate button.