Beginning and ending inventory: formulas and examples
By mise · Updated September 29, 2026
Quick answer: ending inventory is the value of what you count at the end of a period; it becomes the next period's beginning inventory. The link to COGS is: beginning inventory + purchases − ending inventory = COGS, so ending inventory = beginning inventory + purchases − COGS. Value counts at the latest purchase price (common in restaurants), FIFO or weighted average — and stay consistent.
Two numbers from two counts drive your whole cost of goods. Here is how they fit together and how to value them.
The formulas
Valuation methods
| Method | How | Used by |
|---|---|---|
| Latest purchase price | Count × last invoice price | Most restaurants and bars |
| FIFO | Oldest cost used first; stock valued at newest costs | Retail, accounting |
| Weighted average | Average cost of units available | Accounting systems |
For weekly food cost, latest price is practical and close to FIFO when stock turns fast. Whatever you choose, use the same method every period.
Where errors come from
- Counting at a different time than the last count.
- A delivery counted in stock but its invoice not in purchases (or the reverse).
- Different units between counts.
In mise each closed count is valued at the price you paid and becomes the starting point of the next period automatically.
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Frequently asked questions
How do you calculate ending inventory?
Count and value what is on hand at the end of the period. Or, from the books: beginning inventory + purchases − COGS.
Is ending inventory the same as next period's beginning inventory?
Yes, as long as both refer to the same moment and valuation method.