Inventory Valuation Calculator (FIFO / Weighted Average)
Value closing stock and cost of goods sold under FIFO, weighted average and LIFO at once.
Every method, side by side
Cost of goods sold + closing stock = the cost of the goods available under every method. Rows marked “not in IAS 2” are the LIFO ones.
Workings
Closing stock, layer by layer
| From row | Quantity | Cost per unit | Value |
|---|
Cost formulas: IAS 2 Inventories paragraphs 23–27 (the same text as Ind AS 2); LIFO under US GAAP and the US tax code (IRS Publication 538).
1
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the Inventory Valuation Calculator (FIFO / Weighted Average)
Enter one item’s stock ledger — opening stock, purchases and sales in the order they happened — and this calculator values the closing stock and the cost of goods sold under four cost flows at once: FIFO, weighted average for the period, moving average after every receipt, and LIFO (periodic and perpetual). Each method is shown with its workings: which cost layer every sale was taken from, the average cost at the moment of each sale, and the layers still on hand at the end.
Seeing the methods side by side shows how much of a company’s profit is a choice of accounting policy. The same 550 units can leave closing stock anywhere between 2,100 and 2,500 and gross profit between 3,000 and 3,400, purely by the order in which costs are matched to sales. IAS 2 / Ind AS 2 allows only FIFO and weighted average (paragraphs 23–27); US GAAP and the US tax code also allow LIFO. Nothing you type leaves your browser.
How to use it
- Choose the currency (it only affects how amounts are written) and enter the ledger: one row for the opening stock, then every purchase and sale in date order.
- Each receipt needs a quantity and a cost per unit; a sale needs the quantity, and its selling price if you also want revenue and gross profit.
- Already have the ledger in a sheet? Open Paste a stock ledger and paste the rows (with or without a header row) or import a CSV file.
- Optional: enter the net realisable value per unit at the end of the period for the lower of cost and NRV test (IAS 2 paragraph 9).
- Read the comparison table, then pick a method under Workings to see its stock card row by row. Copy summary or Download CSV keeps the figures.
Examples
Opening 100 @ 10 · buy 200 @ 11 · sell 150 @ 20 · buy 150 @ 12 · sell 200 @ 21 · buy 100 @ 13
Goods available 550 units, 6,300 · sold 350 · closing 200 units FIFO: cost of sales 3,800, closing stock 2,500 Weighted average (periodic): 4,009.09 and 2,290.91 Moving average: 3,866.67 and 2,433.33 LIFO (perpetual): 4,000 and 2,300 · LIFO (periodic): 4,200 and 2,100
Costs rose, so FIFO leaves the newest, dearest units in stock and shows the highest profit (3,400 on revenue of 7,200); LIFO charges the newest costs to sales and shows the lowest (3,000 periodic).
The 150 units sold on 10 April
100 units from the opening layer at 10 = 1,000 50 units from the purchase at 11 = 550 Cost of that sale: 1,550
The stock card shows every layer, so the figure can be checked by hand or explained to an auditor.
The same ledger
Periodic: 6,300 ÷ 550 = 11.4545 a unit for everything sold Moving: 10.6667 for the first sale, 11.3333 for the second
IAS 2 paragraph 27 allows both: “The average may be calculated on a periodic basis, or as each additional shipment is received.”
NRV 11.50 a unit, 200 units left
NRV total 2,300 · FIFO cost 2,500 → write down 200, carry at 2,300 Weighted average cost 2,290.91 is already below NRV → no write-down
Common uses
- Value closing stock for a trial balance or a tax computation, with workings an auditor can follow.
- See what a change from weighted average to FIFO would do to profit before proposing it.
- Check the closing stock figure your accounting software produced for one item.
- Work through a FIFO, LIFO or average-cost exam question and see every layer.
The cost formulas and who may use them
- FIFO assumes the units bought first are sold first, so closing stock holds the most recent costs. Allowed everywhere.
- Weighted average cost values everything at one average. IAS 2 paragraph 27 lets the average be worked out for the period (periodic) or again after each receipt (moving average, the one most software uses).
- LIFO assumes the newest units are sold first. It is not one of the cost formulas in IAS 2 / Ind AS 2 paragraph 25, so companies reporting under IFRS or Ind AS cannot use it; it is allowed under US GAAP and by the US tax code (IRS Publication 538, which also explains that LIFO has to be elected on Form 970).
- Specific identification is required for items that are not interchangeable (paragraph 23) — a serial-numbered machine, a bespoke batch. This calculator is for interchangeable units.
IAS 2 also asks for one formula per class of inventory: the same cost formula for all inventories of a similar nature and use, and a change of policy is a change in accounting policy, not a yearly choice.
Periodic or perpetual: why LIFO gives two answers
FIFO gives the same closing stock whether you value the stock after every transaction (perpetual) or once at the end of the period (periodic) — the oldest costs leave first either way. The average and LIFO do not:
- Weighted average periodic uses one average for the whole period; the moving average uses the average at the moment of each sale, so a purchase late in the period does not change what earlier sales cost.
- LIFO periodic treats the units sold as coming from the last receipts of the whole period, even purchases made after the sale. LIFO perpetual takes the newest units on hand at the time of each sale. In the example above that is 4,200 against 4,000 of cost of sales.
The calculator shows all of them, so you can see which figure your own software or textbook question is producing.
Lower of cost and net realisable value (IAS 2 paragraph 9)
“Inventories shall be measured at the lower of cost and net realisable value.” Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Enter the NRV per unit and the calculator shows, for each IAS 2 method, the NRV of the closing units, the write-down needed and the amount to carry.
US GAAP tests inventory measured by FIFO or average cost at the lower of cost and net realisable value too, but inventory measured under LIFO (or the retail inventory method) at the lower of cost or market — a different test, which this tool does not work out, so the NRV column is left empty for the LIFO rows.
How the arithmetic is kept exact
Every receipt is valued as quantity × cost per unit, rounded to the currency’s smallest unit, and every issue is rounded the same way. The last units taken from a layer carry whatever value is left in it, so under every method cost of goods sold + closing stock = the cost of goods available, to the last paisa or cent. Quantities and unit costs may have up to six decimals, so kilograms, litres and metres work as well as whole units.
Currencies without decimals (yen, won) and with three (dinar) follow their own ISO 4217 minor unit once you pick the currency.
Limitations
- One item (SKU) at a time: enter the ledger of one interchangeable stock item. Items with their own identity need specific identification, not a cost formula.
- Costs are the purchase costs you type. Add freight, duty and other costs of bringing the goods in yourself — the Landed Cost Calculator works them out per unit.
- No stock-in-transit, consignment, standard costing, retail method or absorption of production overheads; sales returns and purchase returns have to be entered as the opposite kind of row.
- The lower of cost and NRV test is shown for FIFO and the averages only, because US GAAP tests LIFO stock at the lower of cost or market instead.
- It is a calculator, not advice: the cost formula a business uses is an accounting policy decision for its own accountants.
Privacy
Everything is worked out in your browser. The ledger you type, paste or import is never uploaded, and nothing is saved unless you download it.
Frequently asked questions
Which gives a higher profit, FIFO or LIFO?
When costs are rising, FIFO: it leaves the dearest units in closing stock and charges the oldest, cheapest costs to sales, so profit and closing stock are both higher. When costs are falling it is the other way round. Enter your ledger and the calculator shows the gap in money.
Is LIFO allowed in India or under IFRS?
No. Paragraph 25 of IAS 2 (and of Ind AS 2) allows only FIFO and weighted average cost for interchangeable items, so companies reporting under Ind AS or IFRS cannot use LIFO. US GAAP and the US tax code allow it; the calculator shows LIFO so you can compare, and marks which methods IAS 2 allows.
What is the difference between weighted average and moving average?
Weighted average (periodic) divides the total cost of everything available in the period by the total units, and values all sales at that one rate. Moving average works out a new average after each receipt, so each sale leaves at the average cost at that moment. IAS 2 paragraph 27 permits both; perpetual systems normally use the moving average.
Do the methods ever give the same answer?
Yes. If every unit cost the same, all four give identical figures. If everything was sold, closing stock is zero and cost of goods sold is the whole cost of the goods available under every method. The calculator says so when that happens.
Can I enter kilograms or litres instead of whole units?
Yes — quantities and unit costs accept up to six decimals. The last units of a cost layer absorb the rounding, so the totals still add up exactly.
Can I value several products at once?
Not here: this values one item’s ledger so that the workings stay readable. Run it once per item, or use the Inventory Turnover Calculator for ratios across a whole stock list.