Ending Inventory


DEFINITION of 'Ending Inventory'

The value of goods available for sale at the end of the accounting period. The ending inventory is recorded as the lower of the cost of the inventory or the market value of the inventory. Assuming no write-downs, the ending inventory can be found by starting with the beginning inventory, adding purchases and subtracting the cost of goods sold.

BREAKING DOWN 'Ending Inventory'

Normally the market value of inventory is higher than the cost, since the company expects to sell its goods at a profit. It is common, however, for a certain amount of inventory to go unsold or become outmoded and, thus, its expected market price may become lower than its initial cost. When this occurs, the company must write down the value of its inventory to more accurately reflect the value of the company's assets.

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