Inventory valuation, the method your books need
Fintra values inventory by weighted-average, FIFO, or standard costing - recomputing on every receipt, relieving the right layers on every issue, and reporting gross, reserve, and net value.
Illustrative product view
The three methods Fintra supports
| Method | On receipt | On issue / sale |
|---|---|---|
| Weighted average | Recompute the moving average unit cost | Value at the current average |
| FIFO | Add a new cost layer | Relieve the oldest layers first |
| Standard | Value at the item’s standard cost | Difference from actual becomes a variance |
Moving weighted average
new_avg = (old_qty × old_avg + recv_qty × recv_cost) ÷ (old_qty + recv_qty)
The on-hand unit cost is recomputed on every receipt; issues leave the average untouched and are valued at the current average.
FIFO cost layers
Under FIFO, each receipt opens a cost layer. When you issue or sell, Fintra consumes the oldest layers first, so the cost of goods sold reflects your earliest purchase prices while remaining inventory is valued at the most recent ones. Each pick is tracked per layer, giving a precise, auditable relief.
The valuation report
- Per item and company total: gross value, E&O reserve, and net value (gross − reserve).
- Unit cost is the moving average or FIFO cost, or the standard cost for standard-cost items.
- A stock ledger records every movement with a running quantity for a full audit trail.
Why the method matters
In a period of rising prices, FIFO reports lower cost of goods sold and higher inventory value than weighted average, which changes your margin and your balance sheet. Choosing a method - and applying it consistently on every movement - is a real accounting decision, and Fintra enforces it automatically per item.
Frequently asked questions
What are the main inventory valuation methods?
The common methods are FIFO (first-in, first-out), weighted average (moving average), standard costing, and LIFO (last-in, first-out). Fintra supports weighted average, FIFO, and standard costing. Each values receipts, issues, and sales differently, which affects cost of goods sold and the inventory value on the balance sheet.
What is the difference between FIFO and weighted average?
FIFO relieves the oldest cost layers first, so cost of goods sold reflects earlier purchase prices and remaining inventory reflects recent ones. Weighted average recomputes a single moving unit cost on every receipt and values all issues at that average. In rising-price periods, FIFO typically shows lower COGS and higher inventory value.
Does Fintra support LIFO?
No. Fintra supports weighted-average, FIFO, and standard costing. LIFO is not available as an item costing method, so if your reporting requires LIFO, Fintra is not the right fit for that specific requirement.
How is the moving average cost calculated?
On each receipt, the new average equals old quantity times old average plus received quantity times received cost, divided by the total quantity. Issues and sales are valued at the current average and don’t change it. Fintra carries the average at high precision and rounds money to cents.
Stay in the loop
One practical finance briefing a week - new guides, checklists, and benchmarks.
Value inventory the right way
Start free, no card required. Pick a method per item and let Fintra apply it on every movement.
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