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how to calculate the average inventory. Average Inventory Current Inventory Previous Inventory Number of Periods Average inventory is used often in ratio analysis. The complicated part of determining an average inventory is often counting the inventory itself.
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Clearly if you divide the. Average inventory uses month end numbers. So in conclusion Q2 is the overall amount of inventory at hand in one year.
In order to calculate the average inventory you just need to sum the ending and beginning balance of a companys inventory and then divide the results by 2 like so.
Average Inventory Beginning Inventory Closing Inventory 2 You can easily get all of these numbers reported on a companys balance sheet and income statement. Discrepancy between monthly figures and daily figures. Calculate the average inventory with the formula 9 000 3 000. So the total holding inventory cost per year is Q2 H.
