Finished Goods Inventory Calculator

by Zoho Inventory

Check out Zoho Inventory

Calculate finished goods inventory

Determine the value of finished goods ready for sale in your inventory with this finished goods inventory calculator.

Cost of goods manufactured (COGM)

Cost of goods sold (COGS)

Finished goods inventory value of previous period

Finished goods inventory value

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What is finished goods inventory?

Finished goods are final items that have completed every step of the manufacturing journey and are ready for sale. Also known as finished product inventory, finished goods can vary across industries.

What you need to know about finished goods?

The value of finished products in the balance sheet includes raw materials, labor, and other overhead costs.
The term finished goods inventory is relative as one seller's finished goods can be raw materials to another.
Finished goods have the highest impact on cash flow as it leads to missed opportunities for businesses.

How to calculate finished goods inventory?

Finished goods inventory is calculated by:

Finished goods inventory = (Cost of goods manufactured - Cost of goods sold) + Finished goods inventory value of previous period

Why is calculating finished goods inventory important?

Strengthens financial accounting

All financial documents, including balance sheets, income statements, and profit and loss statements, are determined by knowing the levels of finished goods held by the company.

Minimizes item waste

Cash flow is imperative for any business to sustain itself in the long run. By knowing the right amount of finished goods, businesses can reduce holding costs and improve cash flow.

Improves inventory operations

Calculating finished goods inventory helps businesses improve their overall operational efficiency by eliminating stockouts and tracking manufacturing costs and labor costs of each item.

Frequently asked questions

Finished goods are items that are ready for sale. For instance, items like bicycles, television sets, and dresses are all finished goods. On the contrary, items like cycle chains, LED panels for a television, fabric, and other materials all constitute to work-in-progress (WIP) inventory.
When it comes to journal entries, all finished goods would be a debit to inventory-finished goods.
In terms of assets, finished goods inventory is usually recorded under short-term assets.
Yes, finished goods inventory is a current asset. Current assets are those assets that a company expects to convert into cash within one year or within its operating cycle.

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