Accounting Profit Calculator
Calculate accounting profit with full income statement breakdown — gross profit, EBITDA, operating profit, EBT, and net income with margin percentages.
Ending Inventory Calculator
Calculate ending inventory using FIFO, LIFO, or weighted average methods. Compare COGS across costing methods and analyze inventory turnover metrics.
Ending Inventory⧉
$63,000.00
600.00 units remaining using FIFO
Cost of Goods Sold⧉
$105,500.00
Cost assigned to units sold during the period
Goods Available for Sale⧉
$165,000.00
Beginning $45,000.00 + Purchases $120,000.00
Total Units Available⧉
1,700.00
500 beginning + 1200 purchased
Avg Cost per Unit⧉
$97.06
Goods available ÷ total units (weighted average basis)
Inventory Turnover⧉
1.67x
218 days of inventory on hand
Sell-Through Rate⧉
64.7%
1100 of 1700 units sold
COGS vs Ending Inventory by Method
FIFO
COGS $105,500.00
End Inv. $63,000.00
LIFO
COGS $115,500.00
End Inv. $53,000.00
Weighted Avg
COGS $106,764.71
End Inv. $58,235.29
Method Comparison
| Method | COGS | Ending Inventory | Effect |
|---|---|---|---|
| FIFO | $105,500.00 | $63,000.00 | Lowest COGS → Higher Tax |
| LIFO | $115,500.00 | $53,000.00 | Highest COGS → Lower Tax |
| Weighted Avg | $106,764.71 | $58,235.29 | Middle Ground |
Planning notes, formulas, and examples
About the Ending Inventory Calculator
Ending inventory is the value of goods still on hand at the end of an accounting period. How you calculate it depends on the inventory costing method you choose — FIFO, LIFO, or weighted average — and the choice significantly impacts your reported cost of goods sold (COGS), gross profit, and tax liability.
Under FIFO (First In, First Out), the oldest inventory costs are assigned to COGS first, leaving newer (usually higher) costs in ending inventory. LIFO (Last In, First Out) does the opposite, assigning newest costs to COGS. Weighted average smooths things out by using the average cost per unit across all purchases.
In periods of rising prices, FIFO reports lower COGS and higher profits (more taxes), while LIFO reports higher COGS and lower profits (less taxes). This calculator lets you compare all three methods side-by-side so you can see exactly how each affects your financials and make the best choice for your business situation.
When This Page Helps
Choosing the right inventory method can change ending inventory, COGS, and gross profit when purchase costs move during the period. Use this calculator to compare FIFO, LIFO, and weighted average so you can see how each method values remaining stock and affects reported earnings.
How to Use the Inputs
- Select an inventory costing method (FIFO, LIFO, or weighted average)
- Enter beginning inventory value and units on hand
- Enter total purchases value and units purchased during the period
- Enter the number of units sold
- Set early period and late period unit costs to model changing prices
- Compare ending inventory and COGS across all three methods in the table
- Use presets for common business scenarios
Formula used
FIFO: Sell oldest units first → ending inventory = newest cost layers
LIFO: Sell newest units first → ending inventory = oldest cost layers
Weighted Average Cost = Goods Available for Sale ÷ Total Units
Ending Inventory = Units Remaining × Cost per unit (per method)
COGS = Goods Available for Sale − Ending Inventory
Inventory Turnover = COGS ÷ Ending InventoryExample Calculation
Result: FIFO Ending Inventory $63,000 — COGS $102,000
500 units at $85 + 1200 at $105 = 1700 total units. Sell 1100 (oldest first under FIFO): 500 × $85 + 600 × $105 = $105,500 COGS. Remaining 600 units × $105 = $63,000 ending inventory.
Tips & Best Practices
- Rising prices: LIFO reduces taxes (US only); falling prices: FIFO reduces taxes
- FIFO generally reflects actual physical flow of most products
- Weighted average is easiest to implement and works well for homogeneous inventory
- Track inventory turnover monthly — declining turnover indicates potential overstock or slow-moving items
- Remember: LIFO is only allowed under US GAAP, not IFRS
Method Effects
FIFO leaves the newest cost layers in ending inventory, LIFO leaves the oldest layers, and weighted average smooths the entire purchase history into one unit cost.
Practical Checks
Match the period inputs to the same accounting window, confirm that units sold cannot exceed units available, and verify that early and late costs reflect the actual purchase sequence before comparing methods.
Sources & Methodology
Last updated:
Methodology
This worksheet compares three cost-flow assumptions using the same unit and value inputs. FIFO assigns sold units to the earlier cost layer first, LIFO assigns them to the later layer first, and weighted average divides goods available for sale by total units available to derive one blended unit cost. From the selected method it also derives inventory turnover, days on hand, and sell-through using the same COGS and ending-inventory outputs.
It is a comparison tool, not an accounting-method election or tax-filing engine. Actual reporting can differ if the company uses detailed inventory layers, a perpetual system, lower-of-cost-or-net-realizable-value adjustments, or a different permitted method under its reporting framework.
Sources
- 10.1 Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions (OpenStax Principles of Accounting, Volume 1) — Reference for FIFO, LIFO, and weighted-average inventory-costing methods.
- IAS 2 Inventories (IFRS Foundation) — Reference for IFRS inventory cost formulas, which permit FIFO and weighted average for interchangeable items.
- Instructions for Form 3115 (Internal Revenue Service) — IRS reference explaining that changes to or from inventory accounting methods require IRS consent procedures.
Frequently Asked Questions
In an inflationary environment (rising prices), LIFO produces the highest COGS and lowest taxable income, minimizing taxes. However, LIFO is not allowed under IFRS (used outside the US). Weighted average provides a middle ground. FIFO results in the lowest COGS when prices rise.
In the US, switching methods requires filing Form 3115 (Application for Change in Accounting Method) with the IRS. The change usually requires a Section 481(a) adjustment to prevent income from being duplicated or omitted. You cannot switch back and forth freely.
If you buy a product at $10 then later at $12, selling one unit: FIFO assigns $10 to COGS (sell oldest first), leaving $12 in inventory. LIFO assigns $12 to COGS (sell newest first), leaving $10 in inventory. FIFO shows higher profit; LIFO shows lower profit but less tax.
Inventory turnover shows how quickly you sell and replace stock. Higher turnover means less cash tied up in inventory and lower holding costs. Typical benchmarks: grocery (14-20x), retail (6-8x), manufacturing (4-6x), luxury goods (2-3x).
Yes. IFRS (International Financial Reporting Standards) prohibits LIFO. Only US GAAP allows LIFO. If your company reports under IFRS or operates internationally, you must use FIFO or weighted average.
Weighted average works well when inventory items are interchangeable (commodities, bulk materials, uniform products). It smooths out price fluctuations and is simpler to maintain than tracking specific cost layers like FIFO or LIFO.
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