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Gross Profit Method Inventory Estimate Calculator

What do the numbers come to once the work is shown?

Estimated ending inventory from goods available, sales and the historical gross margin, with the difference to the book balance.

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  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Estimated ending inventory
$258,000
Goods available less estimated cost of goods sold
Goods available for sale
$1,550,000
Estimated cost of goods sold
$1,292,000
Drawn to one scale
Estimated ending inventory$258,000
Goods available for sale$1,550,000
Estimated cost of goods sold$1,292,000
Book inventory less estimate$43,000
All results
MeasureResult
Estimated ending inventory$258,000
Goods available for sale$1,550,000
Estimated cost of goods sold$1,292,000
Book inventory less estimate
A large gap needs investigation
$43,000
How this was worked out
Work shownrecomputed as you type
Goods available = beginning inventory + net purchases
Estimated COGS = net sales x (1 - gross margin)
Estimated ending inventory = goods available - estimated COGS

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Goods available = beginning inventory + net purchases
  • Estimated COGS = net sales x (1 - gross margin)
  • Estimated ending inventory = goods available - estimated COGS

How it works

The gross profit method estimates inventory without a count. It is used for interim periods, after a fire or theft loss, and as an analytical check on a perpetual record.

The estimate is only as good as the margin. It assumes the mix and pricing of the period resemble history, so shifts in markdowns, shrink or product mix reduce reliability. Keep the margin as a percent of sales, not of cost.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Is it acceptable for annual statements?

It is an estimate. Annual inventory is normally supported by a count or a reliable perpetual record.

Margin on cost or sales?

This tool needs margin on sales. Convert a markup on cost by dividing markup by (1 + markup).

Why does the book differ?

Shrink, cutoff errors, price changes and margin drift can all explain it.

Formulas on this page are the standard definitions.

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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