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Inventory estimation

Gross Profit Method Closing Inventory Estimator

Reviewed by CA Nikhil Gupta · Last reviewed 11 October 2026

Enter opening stock, purchases and sales with the usual gross margin to estimate the closing stock and compare it with a count if you have one.

Enter your figures

The fields start with sample figures. Replace them with your own; nothing is sent to a server.

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How the calculation works

  1. Goods available = opening stock + purchases + freight inward − purchase returns.
  2. Estimated cost of goods sold = net sales × (1 − gross margin %).
  3. Estimated closing inventory = goods available − estimated cost of goods sold; the difference from a physical count is shown if you enter one.

Worked example

A trader has opening stock of ₹7,50,000, purchases of ₹18,00,000, freight of ₹50,000 and returns of ₹50,000, so goods available are ₹25,50,000. With net sales of ₹24,00,000 at a 30% margin, cost of goods sold is ₹16,80,000 and estimated closing stock is ₹8,70,000.

Background and professional notes

Assumptions and what this calculator does not cover

Frequently asked questions

When is the gross profit method acceptable?

For interim estimates and losses of stock; year-end inventory still needs a count and valuation under the accounting standard.

Is the margin on cost or on sales?

On sales. A markup on cost must be converted first.

Why is a negative estimate rejected?

Estimated cost of sales above goods available means the margin or sales figure is inconsistent.

Official sources and further reading

Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.

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Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.

Last reviewed: 11 October 2026

Guides that use this calculator

Background, worked examples and the rules behind these numbers.