how to determine finished goods inventory

how to determine finished goods inventory involves calculating the value of products that are completed and ready for sale in a business’s inventory. Finished goods inventory is an essential component of a company’s balance sheet and is calculated based on the cost of goods manufactured, adjusted for any sales or losses. The formula for determining finished goods inventory includes adding the beginning finished goods inventory to the cost of goods manufactured and subtracting the cost of goods sold. This helps businesses monitor their production and sales processes, ensuring that they have the right amount of stock available for customers.