The key to running a profitable business is maintaining organised accounts. Your income statements and balance sheets will tell you everything you need to know about the health of your business, if you know what to look for. This includes the amount of inventory purchased and held.
Beginning Inventory Calculator
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What Is Beginning Inventory?
Beginning inventory or opening inventory is the monetary value of your inventory at the start of an accounting period. It represents all of the goods you can use to generate revenue. Calculating beginning inventory will help you gain a greater understanding of what inventory you hold.
By calculating your beginning inventory, you can easily identify lost stock through theft, breakages, damages, or poor inventory management. You can also see changes in specific products or lines so you can adjust orders to meet customer demand. It's also a useful internal audit practice that forms part of a best practice for business accounting processes.
How To Calculate Beginning Inventory
The first step to calculate beginning inventory is using the records from the previous accounting period to determine the cost of goods sold (COGS). Then multiply the closing inventory balance by each item's production cost. Repeat the same using your new inventory amounts. Add the COGS and ending inventory. To calculate the beginning inventory, subtract the amount of your total inventory purchases from the result.
While you can use the beginning inventory calculator to simplify the process, it's always helpful to know the inventory formula if you need to handle calculations manually.
Cost of Goods Sold + Ending Inventory – Purchases in the current period = Beginning Inventory
You can also use your beginning inventory to calculate your average inventory, which is a good measure of your company's financial performance. You add your beginning and ending inventory and divide by two. Inventory turnover is used to determine how efficiently a company turns amounts of inventory into COGS.
Use our Costs of Goods Sold calculator to quickly find your COGS.
How To Use The Calculator
The calculator is simple to use. All you need to do is look at your inventory balance and input the correct facts and figures into the calculator and it will do the calculation for you. You will need your COGS, Ending Inventory, and Purchases.
How QuickBooks Can Help
Knowing your beginning inventory, cost of goods sold and total purchases is really important for the running of your business. QuickBooks Inventory Management Software helps your business keep track of these numbers with real time stock value tracking, low stock alerts, order tracking and more features. Visit our pricing page to view plans or try a free 30-day trial.
For more useful free tools that can help you run your business visit our tools and templates hub.
Frequently Asked Questions
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