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Opening inventory.. 5000
Purchases 2000
Closing inventory 6000
How is that we calculate average inventory is it 5000+6000÷2 ?If you just want the average inventory the purchases,cost of goods sold and other related figures are irrelevant to the calculation in question.The average inventory is usually calculated as a simple mean average of opening and closing inventory.Of course, the “normal” level of inventory held may be much higher or lower than this calculation indicates.
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