👉 Inventory math is the systematic process of tracking and managing stock levels in a business, ensuring accurate counts of goods from suppliers to customers. It involves recording incoming shipments, adjusting for sales and returns, and maintaining a real-time inventory record. Key calculations include determining the cost of goods sold (COGS) by subtracting inventory value from sales, using the perpetual inventory system to update records immediately upon transactions, and applying the FIFO (First-In-First-Out) or LIFO (Last-In-First-Out) method to allocate costs of inventory items during periods of rising or falling prices. This ensures businesses can efficiently manage resources, avoid stockouts or overstocking, and make informed decisions based on accurate inventory data.
