Average Inventory Ending Cost Converter

Average Inventory Calculator

Input Fields

Beginning inventory

BI

$

Inventory value at the beginning of the period

Ending inventory

EI

$

Inventory value at the end of the period

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Average Inventory

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Average Inventory Formula

$$\text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2}$$

Explanation:
The formula takes the sum of beginning and ending inventory for a period and divides it by two. This provides a smoothed inventory value useful for evaluating inventory turnover and optimizing stock levels.

Average inventory is widely used in accounting and operations to determine how much inventory a company holds on average during a specific period. It provides better insight than just ending inventory alone and is essential for calculating metrics like **inventory turnover ratio**, **cost of goods sold (COGS)** per period, and **days sales of inventory (DSI)**.

Variables Example:

• Beginning Inventory: $50,000
• Ending Inventory: $30,000
• Average Inventory = (50,000 + 30,000) / 2 = $40,000

Use Cases:

• Retail businesses managing stock
• Manufacturing units evaluating raw materials
• Financial analysts assessing performance trends