For an inventory calculation formula example, the current inventory balance is 30,000 units and the prior inventory balance is 20,000. The total inventory is 30,000 plus 20,000, or 50,000.

The information you use to calculate inventory turnover can also be used in the inventory days of supply calculation. This, Profit.co says, is the measure of how long, on average, it takes to run ...

Take XYZ fictional company with $500,000 in COGS and $100,000 in average inventory. Using the formula for inventory ratio, divide the COGS by the average inventory. The inventory ratio is 5.

Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory. This latter equation uses average inventory as the denominator, which smooths out fluctuations caused by cyclical peaks and ...

In using the latter formula (and both formulas produce the same result), average inventory is also calculated by adding inventory at the start and end of the period and dividing by two.

The main difference among weighted average, FIFO, and LIFO accounting is how each calculates inventory and cost of goods sold. Each system is appropriate for different situations.