FIFO For Inventories Calculator
Calculate ending inventory value and COGS using First In First Out inventory valuation method
FIFO Inventory Calculator
Inventory Purchases
Purchase 1
Maximum available: 0 units
Used for profit calculation
FIFO Calculation Results
Add inventory purchases and units sold to calculate FIFO results
Example FIFO Calculation
Inventory Purchases
Batch 1: 100 units @ $10.00 = $1,000
Batch 2: 110 units @ $15.00 = $1,650
Total Inventory: 210 units = $2,650
Sale Transaction
Units Sold: 150 units
FIFO Logic: Sell oldest inventory first
FIFO Calculation
Sold: 100 units @ $10.00 + 50 units @ $15.00
COGS: $1,000 + $750 = $1,750
Ending Inventory: $2,650 - $1,750 = $900
Remaining: 60 units @ $15.00 = $900
FIFO vs LIFO
FIFO (First In, First Out)
Sells oldest inventory first
✓ Higher ending inventory during inflation
✓ Lower COGS during inflation
LIFO (Last In, First Out)
Sells newest inventory first
✓ Lower ending inventory during inflation
✓ Higher COGS during inflation
Inflation Impact on FIFO
Rising Prices
Higher ending inventory value, lower COGS
Falling Prices
Lower ending inventory value, higher COGS
Tax Impact
Lower COGS = higher taxable income
Affected Financial Ratios
Current Ratio
Inventory Turnover
Days Inventory Outstanding
Gross Profit Margin
Return on Assets
Understanding FIFO Inventory Valuation Method
What is FIFO?
First-In, First-Out (FIFO) is an inventory valuation method that assumes the first items purchased or produced are the first items sold. This method is widely used for financial reporting and tax purposes, especially in periods of rising prices.
How FIFO Works
- •Items are sold in chronological order of purchase
- •Oldest inventory costs go to COGS first
- •Newest inventory costs remain in ending inventory
- •Reflects physical flow in many businesses
FIFO Calculation Steps
- 1. Record all inventory purchases with quantities and costs
- 2. Determine total units sold during the period
- 3. Apply FIFO: sell oldest inventory first
- 4. Calculate COGS from sold inventory costs
- 5. Calculate ending inventory from remaining items
Formula: Ending Inventory = Total Inventory Value - COGS
Advantages of FIFO
- ✓Matches physical flow of most businesses
- ✓Ending inventory reflects current market values
- ✓Reduces risk of inventory obsolescence
- ✓Generally accepted accounting principle (GAAP)
- ✓Simpler to understand and implement
Common Use Cases
- •Perishable goods (food, pharmaceuticals)
- •Fashion and seasonal items
- •Technology products (avoiding obsolescence)
- •Retail businesses with high turnover
- •Manufacturing with raw materials