# Basic Inventory Equation

I have a difficult time keeping all the below relationships/equations in my head: COGS = Begin Inv. + Purhcases - End. Inventory PURCHASES = End. Inv. - Beg. Inv. + COGS Begin Inv.= COGS - Purchases + End Inventory End. Inv = Beg. Inventory + Purchases - COGS Anyone have a good device on how to remember all of these? It seems like if I can just remember the FIRST one I can solve for all the others? However, when I re-arrange algebraically to solve for another I often get the order messed up.

Just remember the first equation then rearrange the values to get what ya want

Why do you have to memorize anything? Just think about it. You have stuff now. How did you get to where you are now? You start out with stuff. (Beg. Inv.) Buy stuff. (+Purchases) Sell stuff (-COGS). And you end up with what you have now. (=End Inv.) C’mon people this sh!t is not hard at all.

^^douchebag thinks its not hard, then we should assume everyone thinks it’s not hard.

^^ Oh I’m sorry did I hurt your feelings before? You need to grow some thicker skin if you want to make it in this industry

NYCAnalyst86 Wrote: ------------------------------------------------------- > ^^ Oh I’m sorry did I hurt your feelings before? > You need to grow some thicker skin if you want to > make it in this industry http://i119.photobucket.com/albums/o144/League_of_Cantankerous_Misanthropes/InternetToughGuy.jpg

You seem to use that alot, seems like you’ve had it done to yourself quite a few times.

NYCAnalyst86 Wrote: ------------------------------------------------------- > You seem to use that alot, seems like you’ve had > it done to yourself quite a few times. http://farm1.static.flickr.com/75/195983063_e380efd610_m.jpg

Agree with NYCAnanlyst86

Dear all, I get some difficulties in defining COGS base on excel spreadsheet that needs to be help by you. Every months when closing book, i can have some inventory detail book oof accounts extracted from account software. The inventory accounts are: 1/ Beginning inventory Goods in transit: 100.00 Material inventory: 500.00 WIP: 400.00 Finished goods: 700.00 2/ Ending inventory Goods in transit: 150.00 Material inventory: 350.00 WIP: 250.00 Finished goods: 260.00 My job now is base on the detail account book of inventory to breakdown account and define the purchase in period. Then, input purchase in period into spread sheet then it automatically calculates the COGS. Anyhow, i have never define exactly the purchase data in period. The reason is due to conversion between inventory account from goods in transit to material inventory, then to WIP… and then from WIP to finished goods. I can’t find overlap inventory account when there some conversion like that. Could you please kindly give me advices on solutions. Thank you very much. Best Regards,

IsleSea Wrote: ------------------------------------------------------- > I have a difficult time keeping all the below > relationships/equations in my head: > > COGS = Begin Inv. + Purhcases - End. Inventory > > PURCHASES = End. Inv. - Beg. Inv. + COGS > > Begin Inv.= COGS - Purchases + End Inventory > > End. Inv = Beg. Inventory + Purchases - COGS > > Anyone have a good device on how to remember all > of these? > > It seems like if I can just remember the FIRST one > I can solve for all the others? However, when I > re-arrange algebraically to solve for another I > often get the order messed up. There are two problems 1. You really shouldn’t need to memorize the first one. 2. When you rearrange one of the formulas you should always get one of the others 1. I agree with NYCAnalyst’s straight-up way of looking at it. Hopefully thinking this through and working a few problems will make this click: You start out with stuff. (Beg. Inv.) Buy stuff. (+Purchases) Sell stuff (-COGS). And you end up with what you have now. (=End Inv.) 2. Make whatever you’re solving for positive then just add and subtract the others so you’re left with that one positive item alone on one side of the equation. If you’re having trouble with this very basic math I strongly urge you to practice it until you’re getting the correct answer every time. That would be a MUCH better use of your time than memorizing the same formula written four differnt ways.

I would recommend that you look at it as two very simple formulas. Beginning inventory plus purchases = goods available for sale BI +P =GAS Goods available for sale less you still have on hand is what you sold GAS - EI =CGS If you can remember these two baisc concepts and know how to rearrange simple formulas you shold be okay. This is the easy stuff. If you can’t get past this then give up now.